Quote:SAN FRANCISCO, California (Reuters) -- Microsoft Corp. plans to give paying customers for its Hotmail e-mail service 2 gigabytes of storage and boost the size limits on free accounts, matching similar moves earlier this month by rival Yahoo Inc., the company said Wednesday.

Microsoft also said that it will roll out free e-mail and anti-virus protection to all the 170 million MSN Hotmail customers worldwide that will both scan and clean incoming and outgoing e-mail for viruses and worms before they can enter a customer's inbox.

The changes will start early in July, Redmond, Washington-based Microsoft said.

Yahoo earlier this month made good on a promise to boost the storage it provides to users of its e-mail service, raising the stakes in the e-mail war with Web search rival Google Inc. Google has announced plans for its Gmail service that gives users 1 gigabyte of free storage, far more than offered by Yahoo or Microsoft's e-mail services.

"The playing field has changed," said Blake Irving, vice president of communication services and member platform for MSN. "We're going to take storage off the table as an issue."

Microsoft will now boost storage to 250 megabytes for users of its free MSN Hotmail and also increased the size of attachments that can be sent with e-mails, to 10 megabytes from 1 megabyte previously. Users of the free MSN Hotmail before had 2 megabytes of storage capacity.

Microsoft also announced a premium Web service called MSN Hotmail Plus, for $19.95 per year, giving customers 2 gigabytes of online storage and the ability to send 20 megabyte attachments.

All current Hotmail extra storage subscribers worldwide will be upgraded to MSN Hotmail Plus when it launches globally later this summer, Microsoft said. MSN Premium subscribers will also receive those added storage benefits later this year.

Customers of Hotmail Plus also will not see graphical advertisements -- they will be replaced by text advertisements -- and their accounts will never expire, Irving said. Users of the free Hotmail e-mail service must log in at least once every 30 days or their accounts expire.