Megaupload Shut Down By The FBI

Jan 19, 2012
Originally published on January 20, 2012 4:37 pm

Click the link above to listen to Laura Sydell's conversation with Morning Edition's David Greene about the Megaupload indictment and the attack on the Department of Justice's website by the group Anonymous.

Megaupload, one of the world's most popular file-sharing sites, was shut down Thursday as the U.S. Department of Justice charged its founder and several executives with violating piracy laws. As a technology used to transfer files too large to be sent by email, Megaupload has perfectly legitimate uses, but the Motion Picture Association of America claims that most of the content transferred over the site violates U.S. copyright laws.

The Justice Department agreed, and today in Virginia a grand jury unsealed a 72-page indictment against defendants including Megaupload Limited and individuals including the company's founder, Kim Dotcom, as members of "the 'Mega Conspiracy,' a worldwide criminal organization whose members engaged in criminal copyright infringement and money laundering on a massive scale with estimated harm to copyright holders well in excess of $500 million and reported income of $175 million."

Four individuals associated with the site have already been arrested in New Zealand. They include Megaupload's founder. The German-born Dotcom, aka Kim Schmitz, has notoriously managed to maintain a rather high profile despite prior accusations of copyright infringement. For a look at Dotcom's battle with Perfect 10, an adult-entertainment company, check out this profile on CNET.

Megaupload is just one of a number of sites that allow users to upload large files that can then be downloaded from another computer. (A few of the questions prompted by the indictment: Why Megaupload? Given the amount of content transferred over the site, how did they possibly estimate the monetary harm to copyright holders, which include, notably, major record labels and movie studios? What will happen to the people who paid for subscriptions to Megaupload?)

What the site's still-operational competitors, including Rapidfire and Sendspace, don't have is a founder as notorious as Schmitz or famous affiliates involved in another legal battle with record labels. In December, after a music video in support of Megaupload that featured Kanye West, Will.i.am. and Diddy surfaced, Universal Music Group filed a lawsuit against Megaupload for copyright infringement. Earlier this week, the New York Post reported that the producer Swizz Beatz (who is married to Alicia Keys) is the CEO of Megaupload. Swizz Beatz, whose real name is Kasseem Dean, is not named in today's indictment.

UPDATE 4:15 p.m. Friday, January 20: Ira Rothken, an attorney for Megaupload, says the producer never officially became the CEO of the company, despite yesterday's confirmation by Swizz's publicist that he was. "To my knowledge, Swizz Beatz was never involved in any meaningful way," Rothken told the website VentureBeat. "He was negotiating to become the CEO, but it was never official."

In 2005, the Supreme Court decided against the file-sharing site Grokster in a suit filed by MGM Studios Inc., determining that someone who "distributes a device" (read: VCR, CD burner, file-sharing site) "with the object of promoting its use to infringe copyright ... is liable for the resulting acts of infringement by third parties." Going by this precedent, Megaupload will likely have to show that it was created for a purpose other than file-sharing that infringes on copyrights.

The indictment against Megaupload comes just one day after protests against the Stop Online Piracy Act (SOPA) reached a fever pitch on the Internet, and seems to have provoked a riot of responses. Thursday afternoon the hacker group Anonymous suggested, via its Twitter feed, that it had launched a coordinated attack on websites for the RIAA, MPAA, Copyright.gov, the Justice Department, Universal Records, Warner Music Group and BMI. At various points that afternoon and evening, each of those sites had trouble loading.

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RENEE MONTAGNE, HOST:

This is MORNING EDITION, from NPR News. I'm Renee Montagne.

DAVID GREENE, HOST:

And I'm David Greene, in for Steve Inskeep.

In the war against piracy, there were some major attacks yesterday. The federal government shut down one of the Internet's largest file-sharing websites, Megaupload, on charges of copyright infringement. And that spurred a group of hackers to claim their largest attack ever. The group that calls itself Anonymous says it shut down the websites of the FBI and the Justice Department for a while yesterday. Joining us to explain what's happening on the Internet is NPR's Laura Sydell.

Laura, good morning.

LAURA SYDELL, BYLINE: Good morning.

GREENE: So what exactly are these charges against this website Megaupload?

SYDELL: Well, first, let me explain what it does. Megaupload is this site where people can upload large files, files that are too large to send via an email. And, you know, you can use this legitimately, like say I wanted to send you a big audio file, because I work at NPR. I could use it for that.

GREENE: I could send you my wedding video, and you could upload it.

SYDELL: Exactly. That is right. But what the Justice Department said is that, for the most part, this site is not used legally, that people are trading all kinds of copyrighted material - movies, music, all that kind of stuff. And so they have gone and they have charged them with all kinds of pretty serious things, including, you know, criminal conspiracy. And they can face up to 20 years in prison.

And the Justice Department actually coordinated with authorities in New Zealand and picked up four of the executives from the company in New Zealand.

GREENE: Hmm, right. I saw the indictment is claiming that they were the 13th most popular site on the entire World Wide Web, which is a pretty big deal. And weren't they the site that Will.i.am from the Black Eyed Peas and Alicia Keys, I mean, they put out a video last month supporting them?

SYDELL: Yeah. Here's where it gets really colorful. Yes, that's right. And the guy that they say is the CEO of this company, Swizz Beatz, he's a rapper. And it's unclear if he's really CEO. But he's one of Jay-Z's producers. He's also married to Alicia Keys, and he's friendly with these people. And he said: Hey, will you be in my video? And all these artists were in a video promoting Megaupload.

And then Universal actually sent a take down notice and said take down the video. And Megaupload and Swizz Beatz, you know, fired back and said: We're not taking it down. We have the legal right. So there was that spat going on.

The founder of this company is a big guy who lived in a huge mansion in New Zealand. Apparently, they confiscated like $6 million worth of really expensive cars. He had a black Rolls Royce with a license plate that said God on it. It's quite a colorful story.

GREENE: That's a lot of money tied up in this business, it sounds like.

SYDELL: Yes, there is. Apparently, he had made something like $42 million off of Megaupload.

GREENE: Well, soon after this indictment was revealed, we have these hackers who call themselves Anonymous. And they said they started attacking the DOJ and the FBI. I mean, government websites? What exactly did they do?

SYDELL: Well, what they did is - and just to make it clear, they didn't, like, go in and steal anything from the FBI, no secret documents. They essentially kind of shutdown the site. So if you tried to go to the website, it would be slow, or you couldn't get to the FBI website or the Justice Department website.

This group has a history of doing this. It's a protest group that essentially is a group of hackers. And they were, for example, supporters of WikiLeaks. And when WikiLeaks released all those documents and - from the State Department, Anonymous attacked people who attacked WikiLeaks, like, PayPal shut down WikiLeaks' account. And they attacked PayPal. So they have a history of doing this. And they essentially did this to the Justice Department, because obviously, they think Megaupload is OK.

GREENE: Well, on Wednesday, a lot of people know about Wikipedia, the website, going dark as part of the protest against this anti-piracy legislation. Is this all related?

SYDELL: No. It isn't, really. There is, right now, legislation pending in Congress that would, some people say, force websites to censor certain sites. And so they've been protesting this legislation. But it was not connected, other than both are about the government doing something about what Hollywood and the entertainment business says is a huge problem, which is theft of copyrighted material online.

GREENE: All right, Laura. Thank you very much.

SYDELL: You're welcome.

GREENE: That's NPR's Laura Sydell, speaking to us from San Francisco. Transcript provided by NPR, Copyright NPR.