Google to Launch Israeli Subsidiary, Challenging Local Internet Portals

Company plans to create a Hebrew version of its portal Web site.

Internet portal giant Google is about to open an Israeli subsidiary and broaden its business here, Haaretz has learned. The company plans to create a Hebrew version of its portal Web site. Google is currently interviewing candidates for the CEO position for its Israeli operations. Last week, two business development managers from the Google branch in London visited Israel and met with managers of major portals and Hebrew language Web sites to find future business partners.

If Google indeed expands its operations to Israel, it would provide tough competition to Israeli portals, which include Ynet, Walla!, NRG, Nana, and Golden Pages. Google would compete directly with MSN Israel, which is the only content portal in Israel that belongs to a international company, Microsoft.

Google has had a Hebrew language site for several years. It primarily serves as a search engine and is very popular in Israel. The site is managed from London.

Expanding its Israel operations would greatly improve Google's Hebrew language support, both for its search engine and for additional services. Google Israel would not be limited to a search engine but would be a content-bearing portal providing news, e-mail services and business searches by category.

Should Google expand its services to include content, the move could reduce the numbers of surfers turning directly to major news sites. The very thought stirs up news organizations' fears of Google Israel's potential. Google's strength is also expected to greatly affect the Internet advertising market; the local industry fears that the Internet titan would take a constantly growing share of the advertising pie and control paid advertising in the portals' indexes.

Internet search engines earn money in two ways: Companies pay to appear in one of the first places in the search results or to appear in ads alongside the results.

The Israeli search engine market currently generates $6 million in annual revenues, up almost 100 percent from a year ago. The total Israeli Internet advertising market stands at around $30 million annually.