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

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

No deal has been made, although discussions will continue, the newspaper said. 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 a desktop program. Google's offerings, such as Docs and Spreadsheets, let users access and edit files through a web 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 of 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 (£15) a year, which the company advertises is a "fraction" of the cost for licences 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.