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News Corp. subsid sues AOL

In a move that may chill America Online’s warm embrace of Internet content, a subsidiary of News Corp. has filed a lawsuit charging the online giant with monopolistic business practices and anti-competitive behavior.

The suit, filed in U.S. District Court in Alexandria, Va., by Virginia-based Kesmai Corp., a major online game developer and provider, alleges that AOL, which purchased and installed an online gaming division of its own in 1995, is seeking to force other game providers to either provide their content exclusively or under prohibitive terms.

Considering that, after its acquisition last month of former archrival CompuServe, AOL will control nearly 80% of the online marketplace, Kesmai alleges other providers will feel they have no recourse but to bend to the service’s will.

Additionally, the suit alleges that outside content providers will be forced to scrub their own branding of games in favor of AOL’s own WorldPlay marque, to the detriment of outside providers’ ability to market their content elsewhere in cyberspace.

Finally, the suit seeks to block the $1.5 billion merger between AOL and CompuServe.

An AOL spokesperson said the suit had no merit, and that Kesmai was seeking to litigate its way into a more favorable position on AOL than it was able to negotiate.

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