Remember when file-sharing website Megaupload.com was shut down in January? Even though company founder Kim Dotcom was living in New Zealand, the U.S. Department of Justice was able to shut down the site and have Dotcom arrested in a spectacular takedown.
The reason given for the shutdown of Megaupload was that it allegedly was the centerpiece of a rampant piracy operation, with users of the site openly trading illegal copies of movies, music, video games, e-books, computer software, and other digital media. The DOJ indictment claims over $500 million in damage done to copyright holders of the files.
Largely brushed aside when the service went dead were protests that many legitimate users relied on Megaupload as a digital storage locker — a way to store legitimate personal and work-related files in the cloud for easy remote access, sharing, distribution, and collaboration. Many other people assumed, however, that any talk of legitimate use was essentially blowing smoke, that the site and the majority of its users were up to no good. After all, Apple‘s (NASDAQ:AAPL) iCloud, Google (NASDAQ:GOOG) Docs or Dropbox are easily accessible, legitimate alternatives to something perceived to be as shady as Megaupload.
A lockup in the cloud
The Electronic Frontier Foundation (EFF) has been trying to secure the release of individual users’ personal data from Megaupload servers, so far without success. Other users are threatening legal action against the government.
A recent development, though, is likely to boost EFF’s efforts to help users retrieve their files, which have been inaccessible since the shutdown. It also could complicate the DOJ’s case against Megaupload. Venturebeat has word from Dotcom (who is currently out on bail) that a “large number” of Megaupload accounts are owned by U.S. government officials, including some serving in the U.S. Senate and —wait for it— the Department of Justice.
If confirmed, this information obviously would not only be embarrassing for the DOJ, it would complicate the Megaupload case. Either Megaupload is indeed a legitimate file locker that’s used by legitimate users (and not just a front for digital piracy), or a large number of U.S. government officials are digital pirates.
In the meantime, the DOJ has filed extradition charges against Kim Dotcom, the servers remain offline, the EFF continues to work toward gaining access to files, and Megaupload is assembling lawyers to defend against the charges. Until this is all sorted out, other file locker services like Hotfile, which the Motion Picture Association of America (MPAA) is trying to have shut down, will be watching closely. As will the so-called “legitimate” cloud storage services that worry about their business being hurt by a public backlash against file-sharing sites.
As of this writing, Brad Moon did not own a position in any of the stocks named here.