Megaupload Shut Down In Stunning Display of Bad Timing

Dumping BeerUPDATED: Megaupload, one of the most popular locker sites on the Internet, has been shut down by federal authorities. Seven people involved with the site have been charged with copyright infringement and conspiracy, says the New York Times. Four of them have been arrested.

Whether the timing stemmed from coincidence, a desire to get into the tech world’s face or utter tone-deafness, the news came not 24 hours after a global online protest led a number of legislators to rethink their positions on the proposed anti-piracy legislation SOPA and PIPA.

The hacker group Anonymous quickly reacted, vowing to shut down the sites of the Justice Department, the Motion Picture Association of America, and the Recording Industry Association of America. Indeed, the sites were disrupted for a time yesterday.

Why pick on Megaupload? Explains the Times:

Megaupload, one of the most popular so-called locker services on the Internet, allowed users to anonymously transfer large files like movies and music. Media companies have long accused it of abetting copyright infringement on a vast scale. In a grand jury indictment, Megaupload is accused of causing $500 million in damages to copyright owners and of making $175 million through selling ads and premium subscriptions.

Fellow file locker sites Rapidshare and Mediafire have to be sweating bullets right now waiting for another shoe to drop.

How It Happened

TorrentFreak.com has a great post on the who, what, why, and where of the takedown and indictments. The real linchpin appears to be a group of incriminating emails. The indictment twice mentions “an undicted co-conspirator,” which could mean an employee who was granted immunity to prosecution in exchange for their cooperation.

Whether the emails were from an inside source, some sort of electronic wiretap, or a combination of the two, TorrentFreak says they included some pretty salacious and incriminating information:

An email from 2006 claims to show how MegaUpload attempted to download large amounts of content from YouTube and appeared by April that year to have obtained 30% of the site’s content. A follow up email in 2007 claimed that “Kim [MegaUpload's founder] really wants to copy Youtube one to one.”

An email from August 2006 titled “lol” contained a screenshot of a MegaUpload download page showing a cracked copy of CD burning software Alcohol 120%.

Other correspondence quoted in the indictment appears to show key staff members sending each other links to copyright works hosted on MegaUpload.

“We have a funny business . . . modern days pirates,” the exchange begins. “We’re not
pirates,” came the reply. “We’re just providing shipping services to pirates.”

To further complicate things for the indictees, it’s also being alledged that key staff memebers were knowingly exchanging links to copyrighted movies and TV shows. One email indicates that founder Kim Dotcom (gotta love the hubris of the last name change) sensed that the company was in dangerous territory.  Discussing a TorrentFreak article about US seizure operations, he wrote, “This is a serious threat to our business. Please look into this and see how we can protect ourselfs (sic),” adding, “Should we move our domain to another country, Canada or even HK?”

The Feds could have a decent case here. However, it’s the all or nothing shutdown that’s really the issue.  As of today, millions of MegaUpload’s customers, who were in no way involved in copyright infringment, have no access to the files residing on the company’s servers.  And that, my friends, is what the anti SOPA/PIPA crowd is all worked up about.

Updated 11:35 to add TorrentFreak report.

Comments

  1. BY zeek says:

    can you please add a facebook share link as well, cause while i dont like this post, theres no other way to for me to get it on my facebook page.

    so here i to to click the like button

  2. BY markw says:

    Chad,

    Are you suggesting that given all of the incriminating evidence that MU be allowed to continue doing business as usual?

    • BY Chad Broadus says:

      Not at all. Piracy is a legitimate problem that is cheating a lot of hard working artists out of what’s rightfully theirs. There has to be a more elegant way to handle this so that the people who are using the service for legitimate personal or business use aren’t left in limbo due to the alleged corrupt usage by other users/management.

      • BY speakpolitics says:

        I disagree with the idea is that artists’ works are “rightfully theirs.” That is only true until a work is released to the public, after which it may then be copied or modified freely. However, some artists understandably FEEL cheated by this, so they are less likely to produce and publish their works–especially as a full time job–with such a high risk of having their content distributed by more efficient competitors who didn’t have to invest in development of the work. The ONLY purpose of copyright law (and intellectual property law in general) is to mitigate this risk for a limited period of time, which provides incentive to publish more content.

        The issue has progressively been misrepresented until now many people think it’s possible to “own” a particular combination of numbers, letters, colors, or sounds. If that were true, then copyright protection would never expire. Ownership doesn’t expire.

        But don’t people forever own their ideas? Sure, nobody has the right to erase or destroy our ideas. And nobody has the right to force us to give our ideas to the public domain. But once they’re published, they’re going to be copied and reworked by everyone who is exposed to those ideas.

        Every idea is shaped to a great degree by our sensory inputs throughout life. The idea that Newton might “own” calculus (whether for 10 years or for eternity) because he was the first to put it on paper is ludicrous. A huge body of mathematical prior art made it inevitable that someone would propose calculus. We only provide temporary copyright protection as incentive for people like Sir Isaac Newton and Lady Gaga to bring new ideas into the public domain.

        Copyright protection in the US has steadily grown from 14-28 years in 1790 to 100+ years today. This is despite the fact that technology is making it easier and cheaper to produce, market, and distribute content. Artists today need LESS incentive to publish than they did 200 years ago. The period of copyright protection should correspondingly be reduced.

        Until we have a sane and rational copyright law based on sound principles, I say let MegaUpload continue business as usual. I am very tempted to say the government should instead use those resources to put more musicians and movie stars in prison for drug crimes, but I’m opposed to prohibition as well. That’s for another long-winded comment in another place. :)

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