Google takes on Microsoft with rival free e-mail

Google, the dominant online search engine, is to offer a free e-mail service that it promises will block spam as it steps up the battle with its internet rivals Yahoo! and Microsoft.

Offering up to 500 times more storage capacity than Hotmail, the service, called Gmail, could be available within weeks.

Larry Page, co-founder of the company, said users will be able to search their retained e-mail using Google's technology just as they now do for web pages, and the service will be kept free by including text-based adverts related to the content of the e-mails, just as the present search engine does.

The move intensifies the battle for internet users' hearts, eyes and typing fingers by three companies which have become dominant online - Google, used for 80 per cent of online searching, Yahoo!, the most widely used "portal" for news and e-mail, and Microsoft's Hotmail, the biggest free e-mail service.

Microsoft has recently announced plans to build internet searching, performed using its own MSN search engine, into future versions of its dominant Windows operating system. Yahoo! has also stepped up its efforts to challenge Google, dumping it from its own search service and buying an online shopping comparison site with which to lure surfers.

But Google's vast free e-mail offering, allied with its growing range of services - which now includes searching of web pages, news, images and, in the US, a shopping comparison site called Froogle - could work together with its strong brand to pull people away from Hotmail and Yahoo!, which have both had to limit the amount of free storage that they offer to users. "Google is going after Bill Gates," said Hellen Omwando, a consumer analyst at Forrester Research. "E-mail is the number one activity on the Net: when people come online, the first thing they want to do is send e-mail. This will definitely siphon people off from MSN's Hotmail, Yahoo! and AOL."

Rivals were cautious not to dismiss the challenge too soon, having seen how Google - which is still privately owned, and only arrived on the Web in 1998 - has grown to dominate online searching.

Will Collins, Hotmail manager at MSN UK, said: "It will be interesting to see how Google's trial develops and what they ultimately will deliver broadly to consumers. We are focused on ensuring that our 170 million active MSN Hotmail customers are increasingly satisfied with the world's largest web-based e-mail service."

In the past few years Hotmail and Yahoo! have both had to limit the amount of free storage that they offer users - Hotmail to 2 megabytes, and Yahoo! to 4Mb. Larger storage is only available with annual payments: Yahoo! charges $100 for 100Mb storage. Google's offering will let people receive single e-mails that are 10Mb in size, and put virtually their entire e-mail history online.

Kate Burns, head of Google UK's advertising sales, said: "I've used both the Microsoft and Yahoo! free mail products, but I've have had to delete old e-mails, or I've come back and found all my e-mails are gone.

"We believe that the user should have the ability to store all their e-mail."