GOOGLE'S VIEWS ON EGYPT'S ECONOMIC ENVIRONMENT,

UNCLAS SECTION 01 OF 02 CAIRO 006035

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STATE FOR NEA/ELA AND EB/CIP
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USTR FOR SAUMS/AUGEROT/MCHALE/NEUREITER
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E.O. 12958: N/A
TAGS: ECON ECPS EINT EINV ETRD KCOR KGIT PHUM EG CH
SUBJECT: GOOGLE'S VIEWS ON EGYPT'S ECONOMIC ENVIRONMENT,
INTERNET CONTROLS

Sensitive But Unclassified, Not For Internet Distribution


1. (SBU) Summary: On September 14, Google,s Regional
Manager for the Middle East and North Africa Sherif Iskander
gave econoff an overview of Google,s business in the region
and opined optimistically about the improvement of Egypt,s
business environment and economy, though with some
reservations. Google,s ambitious plans, although still in
the preliminary stages, could eventually contribute to
increased Internet usage among Arabic speakers and a more
vibrant e-business in the region, with ensuing economic
benefits. Iskander also discussed Google's approach to
complying with Egyptian Internet filtering laws. End Summary.

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Google,s Ambitious Middle East Plan
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2. (SBU) On September 14, econoff met with Sherif Iskander,
Google,s Regional Manager for the Middle East and North
Africa, to discuss Google,s business in the region, Egypt,s
economic reforms, and the opportunities and challenges that
lie ahead. Google is just beginning its operations in the
region and is focused on fostering small- and medium-sized
enterprises (SMEs),the advertisements of which make up the
bread and butter of Google,s revenue. Since less than five
percent of Egyptian SMEs have Internet access and less than
one percent of the Internet,s content is in Arabic, Google
is embarking on projects to increase Internet access among
its core customer group and provide a greater amount of
Arabic content. In order to increase local Internet use,
Google plans to provide software that is totally Web-based
and low-maintenance, thus alleviating costs for businesses
that may not even have a computer. With this type of
software, businesses would be able to use Google,s products
from a local Internet caf or anywhere else.


3. (SBU) Where the company might make more of a difference,
however, is in making Arabic content on the Internet more
prevalent and accessible. It has already launched Gmail in
Arabic, which according to Iskander is the first e-mail
application for Arabic speakers requiring no knowledge of
English. Additionally, the company has a research team
working on a new context-based method of machine translation
between English and Arabic, a notoriously difficult problem.
Iskander was optimistic that Google,s team would eventually
make translations at least intelligible enough to do
business, though the time frame for this was unspecified.
Google plans to link its translation engine to its search
software, so that a search in Arabic returns not only Arabic
sites but also those translated from English, and eventually
from other languages. (Comment: Lack of Arabic content is
one of the primary hindrances cited by the business community
to increasing e-business in Egypt. End Comment.)

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Upbeat about improving economy ...
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4. (SBU) Iskander talked at length about what he sees as
recent improvements in Egypt's business environment and the
opportunities and challenges that lie ahead. Officials in
the Nazif government have been much more accessible to him
and his colleagues than those of previous governments. He
was also impressed with the increased transparency and amount
of public information about several recent issues, including
the 3rd mobile license, the upcoming Omar Effendi sale, and
the investigation into recent train accidents. According to
Iskander, prior to 2004 all of these developments would have
been shrouded in secrecy. Perhaps most telling is that prior
to 2004, Iskander himself was conducting almost all of his
business based in Dubai because of the poor business
environment in Egypt. Iskander was particularly upbeat about
the IT/telecom sector's prospects. In addition to the 3rd
mobile license, Egypt has become a more popular destination
for call centers, including those for Microsoft and Oracle.
Egypt's call centers are doing well because of high English
language standards and because they do not try to fool
customers into thinking that their employees are actually in
the U.S., a practice that apparently backfired in India.

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... but wary of fundamentalists and lack of vision
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5. (SBU) Iskander sees the biggest challenges to continued
economic growth to be two-fold: opposition under a religious
banner from people not yet benefiting from reform projects,
and a lack of planning in long-term growth strategy. He
believes that Egyptians who do not see immediate benefits
from economic reforms may use religion as an excuse for
opposition. If economic reforms progress far enough,
however, and reach deep enough into all levels of society,
then this opposition would eventually disappear. Regarding
long-term growth strategy, Iskander thought that many of the
current GOE projects are aimed at "plugging the holes" in a
broken system without adequate thought for the future, though
the IT/telecom sector was slightly better off in this regard.

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Censorship
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6. (SBU) Iskander prefaced his comments on censorship by
stressing that Google is a very moral company, and does not
place advertisements for pornography or alcohol (except for
wine). He also stressed that Google must comply with host
country laws wherever it operates, but explained that Google
does not host any of its services from Egypt, but rather from
the U.S. In this way, the company does not implement
censoring mechanisms itself, but rather allows Egyptian ISPs
to censor locally as they do with all Internet content.
Google thus complies with censorship regulations without
doing the actual censorship itself.


7. (SBU) Econoff queried Iskander on why Google did not take
this approach in China, where the company has been criticized
for censoring its content. Iskander responded that unlike
Egypt, Google needed to host its Chinese services from China
due to the way the Chinese are connected to the Internet.
The company was thus required to implement censorship itself.
However, Iskander said that Google has publicly given a
different reason for why it hosts its Chinese services from
China, namely that the sheer size of the Chinese market
requires locally-hosted services for efficiency. Iskander
said the company gives this explanation publicly so that no
other countries (read: Saudi Arabia) would try to close their
Internet off as China has done.


8. (SBU) Comment: Google is walking a fine line with this
approach to censorship, neither endorsing nor pushing back
against limits on freedom of information. The strong
blowback from its censorship in China may have pushed the
company to try this different approach. Additionally,
because the Arab market is still so small, Google loses
little in efficiency by hosting its Arabic services outside
of the region. End comment.
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