Google targets enterprise with Postini acquisition

Google said on Monday it has agreed to acquire email security company Postini for $625m (£310m), expanding its package of online applications to compete with Microsoft's Office software.

Postini supplies security and encryption services, protecting instant messaging, email and other communications, to more than 35,000 businesses and 10 million users worldwide. Google said the deal could enable it to provide organisations with more hosted services similar to its Google Apps package, which includes its email service Gmail, Calendar, and Talk, its messaging service.

Google has been expanding its range of services from web search and advertising to include popular software applications for businesses, such as word processing, putting it in direct competition with Microsoft's Office package of applications.

Google said its Google Apps has been adopted by more than 100,000 businesses to date.

"With this transaction, we're reinforcing our commitment to delivering compelling hosted applications to businesses of all sizes," said Google chief executive Eric Schmidt in a statement.

Google said Postini will become a wholly owned subsidiary. The deal is expected to close by the end of the third quarter.

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