Megaupload Shutdown

Published on Tuesday, 31 January 2012 12:08

	By Kate Marchant Follow @_AsktheExperts_

The US Government has shut down one of the world’s most popular file sharing sites, Megaupload.com, following accusations that the founders of the site facilitated large-scale online piracy for over five years.

Prosecutors also claimed that the firm illegally cheated copyright holders out of around $500m in revenue through making possible the reproduction and sharing of copyrighted material. They are also charging those associated with the firm with racketeering and money laundering.

News of the shutdown, being named as one of the largest copyright cases in US history, was announced on Thursday 19^th January; just one day after some of the world’s biggest internet firms staged a 24-hour protest against the Stop Online Piracy Act (SOPA) introduced last year.

Seven people associated with the site were indicted earlier this month over the allegations outlined above, including founder Kim Dotcom, Finn Batato, Bram Van Der Kolk, Mathias Ostmann, Andrus Nomm, Julius Bencko and Sven Echternach. Batato and Van Der Kolk have been released on bail. However, Dotcom has been denied bail as it has been suggested that he may be a “flight risk”.

The extremely popular site accounted for 4% of total internet traffic and had become the 13^th most visited site on the web. The company has earned its associates over $175m since it began and had 180 million registered users and averaged around 50m daily visitors before being closed. Premium subscribers, which had unlimited access to MU's downloadable content uploaded by other users, made the company a total of $150m, while adverts provided an additional $25m in profits.

The US government claims that the site violated copyright legislation by illegally broadcasting movies, music and television shows on a huge scale. They allege that Megaupload employed a business model that encouraged users to upload and share illegal, pirated material and paid users for their contributions to the site in full awareness that they were breaking the law, while also failing to close the accounts of those that were making illegal contributions.

“Since at least September 2005, Megaupload.com has been used by the defendants and other members and associates […] to wilfully reproduce and distribute many millions of infringing copies of copyrighted works, including motion pictures, television programmes, musical recordings, electronic books, images, video games and other computer software.” If found guilty of these charges, Megaupload executives could face 50 years in prison.

In response to the closure of the site, “hacktivist” group Anonymous launched a cyber attack on several websites rendering them temporarily inaccessible, including the websites of the justice department, Recording Industry Association of America, Motion Picture Association of America and Universal Music. A statement from the group said, “We Anonymous are launching our largest attack ever on government and music industry sites. The FBI didn’t think they would get away with this did they? They should have expected us.”

Kim Dotcom will be held in custody in New Zealand until 22^nd February ahead of a hearing of a US extradition application. The case is expected to be a long and drawn-out ordeal as the judge claimed he could not assess whether the United States had a strong enough case against Dotcom, nor whether Megaupload.com had a strong enough defence case.

"It could take some considerable time to get through the whole thing," senior New Zealand lawyer Grant Illingworth added. "What the judge has to do is decide whether there is a prima facie case that would justify the person being put on trial if the offence had occurred in New Zealand. If the evidence doesn't make out, what under New Zealand law amounts to a prima facie case, then the person walks away."

On a related note, the data held on MU (not all of which is illegal) has just been granted a two-week reprieve from its date with deletion.

What do you think?  Is this a clear cut case?  What should the judge do? Do you agree that Megaupload.com should be charged for intellectual property crime? Or was the website merely an online storage medium? Let us know below.