Very quietly, Google, the world\'s most popular Internet search engine purchased the domain name Google.cz and is making plans to expand into the Czech Republic.

The move spells good news for Czech content providers, but it could be the death knell for local search engines.

Google currently allows for Czech-language searches through its flagship site Google.com, but such searches come without banner ads and don\'t bring the company any revenue. The purchase of Google.cz paves the way for Czech advertisers to make use of the company\'s AdSense program to target potential customers based on their word searches.

Google\'s Czech spokesman Tomáš Fiala refused to discuss the company\'s specific future plans with the new domain name or when Google.cz would officially launch, but analysts say Google has been looking for Czech sales representatives and programmers.

\"We are actively investing in Eastern Europe and realize the enormous potential of expanding our business into the Czech Republic,\" the company said in an official statement. The company purchased the domain name from a private entrepreneur Aug. 10.

The Internet watchdog Lupa.cz says Google is considering putting its Central and East European headquarters in the Czech Republic.

Analysts say Google\'s entrance into the market will take a huge bite out of the country\'s three Czech search engines — Centrum, Atlas and the market-leading Seznam, which currently provides more than 50 percent of all Czech searches.

\"In a year or two, Seznam will be struggling,\" said Jan Starčevič, executive director at domain name provider NetGroup. \"There will be an outflow of visitors, and it will not be temporary.\"

More competition

Analysts say Google.cz will have an immediate impact when it launches.

\"The popularity of online shops will definitely increase,\" said Robert Keller, an analyst with Patria Finance.

Google will pose the biggest threat to Seznam.

Starčevič said that Seznam, which averages nearly 3.5 million visitors per day, trails behind Google in terms of technological innovation.

\"It takes Seznam about one month to include a new Web page into its search engine, while Google needs about 14 days,\" he said.

By localizing its services and raising awareness of its brand, Google could pull customers away from Czech search engines.

The Czech Republic has one of the lowest levels of Internet penetration in Europe; only 42 percent of Czechs have Internet in their homes. As Internet use grows, Google will have more of an opportunity to increase its position here than elsewhere.

\"Google can offer a huge portfolio of services and is coming to an environment that is almost ready to use them,\" Starčevič said.

Seznam Director Pavel Zima downplayed the acquisition of Google.cz, calling it Google\'s new \"marketing trick.\"

\"Nothing significant has happened so far, and Seznam will not make any changes in its business model in connection with the acquisition,\" Zima said.

However, Ivo Lukačovič, Seznam\'s founder and majority stakeholder, said that he considers Google his company\'s greatest competitor.

\"We will have to fight it, \" Lukačovič said.

Atlas and Centrum also denied that Google\'s move will have any major impact on their business.

\"Google\'s acquisition of the Google.cz domain does not mean any change for Atlas,\" said Kateřina Holcmanová, company marketing manager.

AdSense in Czech

Google\'s expansion in the country is good news for customers and Internet-content providers who could benefit from the company\'s advertising model, AdSense.

Through the system, Google can analyze the contents of Web pages included in its search engine and place ads on them according to keywords. Ads appear when customers find a page through Google search.

The system has not included Czech Web sites so far because Google has not yet developed a contextual search for them. It is expected to be launched by the end of this year.

Lupa.cz\'s Editor-in-Chief Aleš Miklík said the application of AdSense would increase the inflow of advertising money to Web sites, which would help improve their quality.

The Czech Internet advertisement market was estimated to be worth 410 million Kč ($18.7 million) in 2005 and is growing 30 percent annually.

But some analysts say Google\'s arrival will benefit Czech Internet penetration as a whole.

\"Online services in the Czech Republic are of lower quality than in Western Europe or the United States,\" Keller said. \"It\'s good news for the Czech Internet that such a renowned company is coming here.\"

The Google.cz domain belonged to entrepreneur Tomáš Schel, who used it to transfer users to his search engine Globalsearch.cz since 2000.

Google obtained the domain name in an out-of-court arrangement with Schel. It declined to disclose how much the deal was worth, and Schel was not available for comment. Experts put the number at millions of crowns.