Popular file-sharing site was shut down after being accused of being responsible for $500 million in revenue that should have been going to the copyright holders of the movies, TV shows and music on the site.

Megaupload was one popular website. Not just in traffic, although it's one of the most heavily used on the entire world wide web, but in terms of celebrity endorsements as well. Kanye West praises it, so does Jamie Foxx and will.i.am, and the somehow famous Kim Kardashian. But despite all that love, the file-sharing site has been shut down all over the world. "The immediate impact upon consumers is probably going to be quite significant and quite dramatic," says Jason Mazzone, professor at Brooklyn School of Law. "There are few other sites that really match Megaupload in terms of the amount of content and the number of users.

The shutdown stems from an indictment issued in a Northern Virginia court accusing the site of being responsible for $500 million in revenue that should have been going to the copyright holders of the movies, TV shows and music on the site.

Taking Megaupload down was a big task. Twenty search warrants were issued in nine countries. $50 million in assets were seized, and seven executives were charged. The indictment was pretty harsh. "It basically says that the operators of Megaupload were engaged in a massive conspiracy to rip off American copyright owners," says Eric Goldman, professor at Santa Clara University School of Law. "The underlying position that the operators of Megaupload engaged in willful copyright infringement is a very aggressive charge against a business, saying that the business was deeply rooted in copyright infringement that everyone knew was wrong."

So it's not just about a company hosting some content that may have been unlicensed. According to the charges, executives of the company were personally uploading material that they knew to be illegal and that they intentionally designed the business to operate under that model. Charges like that are not so unusual, says Goldman, "but then to say, all the other activity on the site that users were engaged in also constitutes a willful copyright infringement, that is an aggressive position." You hear that? The indictment says that everyone who visited the site -- again, one of the most popular in the world, willfully engaged in copyright infringement. 

Now, if you've been listening to our show this week, or if you've followed tech news at all this week, you know that the Stop Online Piracy Act has been in the news a lot lately, as has its Senate companion bill, the PROTECT IP Act. If you tried to look up something on Wikipedia on Wednesday, you learned that it was down in protest of the bills, which are designed to give U.S. authorities much more power in going after sites accused of copyright infringement. But this raid against Megaupload, which was a global operation, happened without either of those laws even coming to a vote. 

"This is a really remarkable example of the power of existing tools that law enforcement," says Mazzone, "notably the FBI,  has to respond to many of the problems that supporters of SOPA and the companion bill in Senate were complaining about.

The timing of the raid, coming as it did the day after the protests by Wikipedia and other sites, may have not been coincidental, according to Goldman. He says, "this might be a way for the Department of Justice to tell Congress whatever you do, we got your back.

Also in this program, another installment of Tech Report Theater. Facebook has added a ton of new apps to the Timeline feature. Now, at long last, you can make sure that everyone knows what you're eating and what movie you just watched. Because that is hugely important information that no one you know should be expected to live without.

About the author

John Moe is the host of Marketplace Tech Report, where he provides an insightful overview of the latest tech news.

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