Google is reportedly in talks with a South Korean software company and its US subsidiary ThinkFree, which makes browser-based office productivity software compatible with Microsoft file formats.

ThinkFree is a subsidiary of Haansoft, which is based in Seoul. Haansoft's CEO, Baek Jong-jin, said he met twice this month with Google's corporate development team responsible for the $1.65 billion acquisition of YouTube, the English-language newspaper Korea Times reported on Sunday.

No deal has been made, although discussions will continue, the newspaper reported. A Google spokesman in London said the company does not comment on speculation. Haansoft could not be reached immediately for comment.

Google is mounting a challenge to Microsoft's dominance of the desktop office productivity software market, by introducing hosted applications that have the feel of desktop software. Google's offerings, such as Documens and Spreadsheets, let users access and edit files through a browser from any computer, with the files hosted on Google's servers.

ThinkFree's applications run in a similar way. The company's free offering, ThinkFree Office Online, is a suite of Java applets, downloaded from the company's servers and cached on the user's computer.

Users have 1GB storage and can use ThinkFree's Calc, a spreadsheet; Show, a presentation program; and Write, a word processor. Thinkfree Office is compatible with Microsoft's Excel, PowerPoint and Word file formats.

ThinkFree offers a Server Edition for $30 a year, which the company emphasises is a "fraction" of the cost for licenses for Microsoft's Office suite. ThinkFree has a desktop edition and two portable editions, one of which allows the viewing of PowerPoint slides on iPod multimedia players.

Baek was quoted as saying other US venture capitalists were interested in ThinkFree if talks with Google ended.

Interest is growing in lightweight applications that run in browsers, as the cost of desktop applications has become exorbitant, said David Bradshaw, principal analyst for Ovum PLC.

Google already has word processing and spreadsheet capabilities, so it may be interested in ThinkFree's presentation program Show.

"Google is definitely moving in the direction of launching an alternative to Microsoft's Office," Bradshaw said. "But it's kind of hard to say if they will definitely be a rival to Microsoft."