Lex: International relations Premium

The new generation of US multinationals has come from nowhere. Barely out of diapers in corporate terms, a handful of internet giants are already starting to demonstrate their power in - and reliance on - overseas markets.

One surprise in Google's maiden results was quite how important the international business was in helping to fuel the search engine's runaway growth. Google, only six years old, already generates 35 per cent of gross revenues abroad. In the third quarter, overseas revenues increased by 139 per cent compared with 2003, easily outstripping US growth of 90 per cent.

International revenues at Ebay - a comparative veteran, aged nine - are growing at more than twice the rate of its US revenues and could overtake them in the next few years.

That success has not come without investment. Ebay was quick to understand the importance of establishing itself as the most liquid market place in its target regions - acquiring businesses in such countries as Germany, South Korea and China. Achieving scale quickly creates a virtuous circle of more sellers attracting more buyers who, in turn, attract more sellers. Once established, such a position has proved hard to attack - as Ebay discovered to its cost in Japan, where Yahoo took a dominant position early.

Google, meanwhile, has expanded overseas organically and largely by word of mouth. It can use its US technology platform for overseas operations. The cost of adapting its website to different languages is modest. Yahoo has had more mixed results. Its partly owned portal does dominate in Japan. In Europe, it has faced more of a challenge from national portals such as T-Online and Wanadoo - in contrast to Google which differentiated itself through a pure focus on search.

The fight over search between Google, Yahoo and Microsoft will continue to rage. But winning overseas will become an increasingly important part of their recipe for success.

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