Monday, July 9, 2007

Google buys online security group for $625m (Financial Times)

Google on Monday beefed up its offerings to the corporate world with one of its largest acquisitions, buying online security and compliance company Postini for $625m.

The move increased the level of competition between Google and Microsoft in offering services to business. Google has built its success on its consumer-oriented search engine, but has been building up Google Apps, an online software suite for companies and organisations.

The news helped Google shares to a record high in New York. Its shares were nearly 1 per cent higher at $544.07 in midday trading and touched $548.74 earlier in the day.

Postini is best known for filtering spam from company inboxes. Google already has similar technology incorporated in its Gmail e-mail service, but it does not have a strong reputation for security in the enterprise.

"The response to Google Apps has been tremendous, with more than 1,000 small businesses signing up for the service every day," said Dave Girouard, head of Google Enterprise. "At the same time, large businesses have been reluctant to move to hosted applications due to issues of security and corporate compliance."

Postini would provide the security and assurance that managements wanted, he said.

The new acquisition, based in San Carlos, California, will become a wholly owned subsidiary of Google. It serves 35,000 businesses and has 10m users worldwide. As well as spam-filtering, it offers instant messaging security and message archiving and encryption.

The privately held company says it has been profitable since 2004. The transaction is expected to close in the third quarter.

More than 100,000 business -users employ Google Apps, which offers e-mail, an appointments diary, spreadsheets and word processing through the web browser. Google Enterprise also sells search appliances and services such as Google Earth and Google Maps.

Google has focused on small acquisitions of start-ups to supplement its web services. Postini ranks as one of three exceptions.

The leading internet company is in the process of acquiring the online advertising company DoubleClick for $3.1bn. Last year, it bought the YouTube video sharing service for $1.65bn.

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