On Monday, Yahoo announced that it will be purchasing Zimbra for $350 million. Zimbra is a provider of web-based mail and the acquisition serves as an investment for Yahoo to improve its internet services and be able to compete with Google and social networking sites such as MySpace and Facebook. The purchase will be paid mainly in cash but Yahoo stocks will be used to make up the difference. Yahoo is now trying to expand its third-party services by targeting web-based businesses apart from advertisers. This decision to buy Zimbra seems to have been fueled by Google’s acquisition of Postini.