Megaupload Shut Down

In what the U.S. Justice Department is calling “one of the largest criminal copyright cases ever”, internationally renown file-sharing site Megaupload (according to the Department of Justice, they had more than 50 million daily visitors and accounted for 4% of total Internet traffic worldwide) were shut down in a series of raids coordinated by the Fedral Bureau of Investigation on January 19, 2012. The raids (executed as part of more than 20 search warrants worldwide) have led to the arrest of 4 people (including Megaupload’s founder, Kim Dotcom) and the seizure of more than $50 million worth of assets, including servers and domain names.

Long accused by media companies and trade groups of assisting in copyright infringement around the world, the U.S. grand jury indictment (which you can view here) accuses Megaupload of causing $500 million in damages to copyright owners and of making $175 million (via the sale of ads and subscriptions). The sting is the result of an investigation that began 2 years ago and relies extensively on private correspondence between the accused, showing that the operators of the sites knew that their services were being used to share illicit content, despite advertising their sites as a way to transfer large files.

The hacker group Anonymous responded by shutting down a number of prominent websites, including the Justice Department itself, the Motion Picture Association of America, the Recording Industry Association of America, and others.

Interestingly, the raids took place the day after widespread online protests against proposed “antipiracy” bills SOPA (the Stop Online Piracy Act) and PIPA (the Protect I.P. Act). Whether or not the timing is coincidental, it adds an interesting element to the debate around these proposed laws: the U.S. Department of Justice was able to shut down the major player in the file sharing industry (and accused violator of intellectual property rights) with currently existing laws. Neither SOPA nor PIPA (with their broad powers of censorship and ability to shut down domestic and foreign sites without due process) was needed to shut these sites down or prosecute their owners and employees.

Additionally, FileSonic and Uploaded.to, two of Megaupload’s competitors, have reacted to the site’s shutdown in different ways: FileSonic has disabled all sharing features and Uploaded.to appears to have stopped offering it’s services to American consumers. While these might be viewed as overreactions to the situation, these events may force other companies in the large file transfer industry to re-examine the situation and their own service offerings. As of this writing, FilesDIRECT has no intention of reducing its service offerings - either in terms of transferring files or in for clients in the United States.

You can read more about these events at the New York Times website and at Digital Trends.

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