AOL hit with $US8bn class-action lawsuit

Consumer watchdog the ACCC will keep a "very close eye" on the proceedings in the $US8 billion class-action lawsuit against AOL in America.

AOL was handed the lawsuit demanding at least $US8 billion in damages apparently caused by its Internet software AOL 5.0.

The suit, filed in the US District Court in Alexandria, Virginia, seeks $US1000 or three times the amount of damage (whichever is greater) each for the estimated 8 million people who have already downloaded the faulty software and "have had the operation of their computer altered as a result thereof", according to the filing.

AOL officials responded by stating their intention to fight the allegations. "[The allegations] have no basis in fact or law and we intend to vigorously contest them," said Rich D'Amato, an AOL spokesman. "Version 5.0 does not prevent members from accessing the Internet through other providers."

A local AOL spokesperson also said the case had "no basis in fact or law".

AOL has come under much criticism since releasing the software -- users have complained of it causing interference with other programs, particularly the software of other ISPs.

The filing alleges that "as part of its normal operation, Version 5.0 disables, interrupts, alters, or interferes with operations of other software installed on those same computers, including but not limited to disabling any other Internet software which provides Internet access by non-AOL ISPs that also may be installed on the computer".

In particular, the lawsuit claims that "AOL knew of or should have known that it operated in such a manner".

However, the AOL spokesperson said the prompt to users before installing the AOL software clearly states the possible implications. The prompt reads: "Would you like AOL to be your only ISP? Selecting yes may affect settings you currently have with other Internet services."

There are roughly 50,000 Australian AOL subscribers.