The FBI is widening its investigation of News Corporation's activities within the US to look at whether alleged computer hacking by one of its subsidiaries was an isolated case or part of a "larger pattern of behaviour", Time magazine is reporting.

Time suggests that the FBI inquiry has been extended from a relatively narrow look at alleged malpractices by News Corp in America into a more general investigation of whether the company used possibly illegal strong-arm tactics to browbeat rival firms.

The allegation of computer hacking was made by the retail advertising company Floorgraphics against the advertising branch of News Corp, News America. In a civil lawsuit against News Corp in 2004, Floorgraphics told a court that its website, protected by password security, had been breached 11 times over four months without authorisation.

The source of the alleged hacking was traced back to an IP address registered to News America in Connecticut.

Time has obtained a copy of a confidential fax sent in the same year by a major investor in Floorgraphics to News Corp's chief financial officer, David DeVoe. William Berkley wrote: "We have just discovered evidence that our proprietary and password-protected computer files … has been breached by News America."

Berkley accuses the News Corp subsidiary of carrying out "some sort of corporate espionage" to obtain the password.

The CEO of News America was later promoted to be the publisher of the Murdoch newspaper the New York Post.

A spokeswoman for News Corp told Time that this was the only incidence of computer hacking that had been brought to the company's attention, and said News America had condemned the act as a violation of its standards.