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Megaupload Limited

Type of business	Limited
Type of site	one-click hosting
Available in	English, Arabic, Chinese (traditional and simplified), Danish, Dutch, Finnish, French, German, Greek, Italian, Japanese, Korean, Norwegian, Polish, Portuguese, Russian, Spanish, Swedish, Turkish, and Vietnamese
Founded	21 March 2005 (2005-03-21)
Headquarters	Hong Kong
Founder(s)	Kim Dotcom
Key people	Kasseem Dean (CEO) Finn Batato (CMO)
Net income	Over 175 million USD
Employees	155
URL	www.megaupload.com
Registration	180+ million
Launched	21 March 2005 (2005-03-21)
Current status	Seized by the Federal Bureau of Investigation on 19 January 2012.

Megaupload Limited, better known for its closed websites including the top-15 file hosting website megaupload.com, is an online Hong Kong–based company established in 2005 that ran a number of online services related to file storage and viewing. The domain names were seized and the sites shut down by the U.S. Justice Department on 19 January 2012 following their indictment for allegedly operating an organization dedicated to copyright infringement, leading to what activist group Anonymous calls "the single largest Internet attack in its history".

Services and websites

The company services included a one-click hosting service known as Megaupload, image hosting and video hosting services known as Megavideo, Megalive, Megapix and Megabox as well as CUM.com (formerly Megaporn, Megarotic, and Sexuploader) which specialised in hosting pornographic contents. (Megaupload itself also allows such content). Other services included Megaclick, Megafund, Megakey and Megapay, all of which were advertisement and financial services. Two additional web sevices, Megabackup and Megamovie, were in development before their closure.

Megaupload.com

Megaupload, the file-sharing service of the company, allowed all users to upload files to the service. After a successful file upload, the user was given a unique URL which allowed others to download the file.

The service was available in two flavours: basic and premium. The basic service was available for free and allowed users to upload files of up to two gigabytes. Free users could not download files larger than one gigabyte, however. Registered free users were offered 200 gigabytes of total file storage. Premium users had unlimited file storage.

Any file uploaded anonymously expired if there were no downloads for at least 21 days. For the registered free accounts, the file expiration period was 90 days after the date the file was last downloaded. Premium accounts had no expiration period as long as the user remained a premium member.

Non-registered and registered users had to wait a few seconds in the download queue and a certain amount of time between transfers after a certain number of megabytes had been downloaded.

Paying premium members also had the benefit of hotlinking: They were able to share a direct link to a file they owned on Megaupload so that anyone could download the file with a single click on that link. The links given to the free users however, were not direct: They were taken to Megaupload website, where they had to wait their turn and possibly respond to a CAPTCHA challenge.

MegaVideo

MegaVideo was an associated, ad-supported video hosting service. For non-members, it was time-limited; it blocked itself after 72 minutes, and then allowed users to resume watching after a 30 minute period.

MegaPix

Launched in late 2010, MegaPix allowed for the uploading of images, competing with other image-hosting services such as Photobucket, ImageShack, TinyPic and others.

MegaLive

Megalive was a live video-streaming service; it competed with Ustream, Justin.tv and Livestream.

MegaBox

Megabox was a music/audio-hosting service for the uploading of whole music libraries and playlists.

MegaPorn

Megaporn was a file-sharing service aimed specifically towards pornographic movies and images.

Statistics

• Unique visitors: 81,000,000
• Page Views (in history): >1,000,000,000
• Visitors per day: 50,000,000
• Reach: 4%
• Registered Members: 180,000,000
• Once the 13th most visited site on the Internet

Software

Mega Manager

Megaupload also released its upload/download manager, Mega Manager, a download manager which featured a link-checker for Megaupload links as well as options to manage uploaded files, and to access the online control box that is also on the Megaupload site. Mega Manager bore striking resemblances to Conceiva DownloadStudio version 5, self-evident in its "Options..." dialogue box and some other aspects of the program. Mega Manager allowed users to automatically resume interrupted up- and downloads, which was especially important when transferring large files or transferring several files unattended.

Megakey

Megakey was an adware application which removed premium limitations on Mega services during "happy hour" periods. In return, the users running Megakey agreed to supply some personal identification and demographic data and to allowed the substitution of ads on third party websites they visit with those of Megaupload.

Filebox

FileBox was a Flash applet which can be embedded onto any external webpage. It allowed users to upload content to Megaupload without having to visit the website itself or download the Mega Manager.

Reception

Unavailability

Although its incorporation was located in Hong Kong, the company did not operate in Hong Kong. From 2009 onward, users with Hong Kong IP addresses were banned from accessing the site. Not even the homepage was accessible by them. Any purchased premium accounts were still able to access the Megaupload site in Hong Kong until the last membership day. Some third party download managers could circumvent this, for example, JDownloader, but only if a proxy was set up and enabled in the program. IPs from Mainland China were blocked as well. The reason for the block remained unclear.

As of 23 May 2010, access to Megaupload was intermittently blocked by the internet authorities in Saudi Arabia by their regulator Communications and Information Technology Commission. Megavideo was also intermittently blocked in the United Arab Emirates due to pornographic content being accessible through the service.

From 9 June 2011 onward, the Malaysian government through Malaysian Communications and Multimedia Commission ordered all ISPs in Malaysia to block Megaupload and Megavideo. Some ISPs reportedly blocked all the sites on the list while other ISPs have been throttling connection speeds.

In July 2011, access to Megaupload and Megavideo was blocked in India, along with RapidShare, MediaFire and a range of other file hosting sites. The blocking occurred after Reliance Entertainment obtained a court order, citing illegal copies of its 2011 film Singham on file hosting sites.

On 19 January 2012, Federal prosecutors in Virginia closed down Megaupload and laid charges against its founder Kim Schmitz and others for allegedly breaching copyright infringement laws. Acting upon a US Federal prosector's request, New Zealand police arrested Schmitz and three other Megaupload executives near Auckland on Friday, 20 January (NZDT, UTC+13).

Criticism

In January 2011, MarkMonitor published a report entitled "Traffic Report: Online Piracy and Counterfeiting", which claimed that Megaupload and Megavideo were, along with RapidShare, the top three websites classified as "digital piracy". Megaupload responded by stating: "Activity that violates our terms of service or our acceptable use policy is not tolerated, and we go to great lengths to swiftly process legitimate DMCA takedown notices".

Megaupload Toolbar was claimed to redirect users to a custom error page when a 404 error occurs in the user's browser. It was also claimed to contain spyware. However, FBM software claimed that the Megaupload toolbar is free of spyware.

Megaupload song controversy

On 9 December 2011, Megaupload published a music video titled: "The Mega Song", showing artists including Kanye West, Snoop Dogg, Alicia Keys and will.i.am endorsing the company. The music video was also uploaded to YouTube, but was removed following a takedown request by the record company Universal Music Group (UMG). Megaupload said that the video contained no infringing content, commenting: "we have signed agreements with every featured artist for this campaign". Megaupload requested an apology from UMG, and filed a lawsuit against the company in the United States District Court for the Northern District of California, on 12 December 2011. UMG denied that the takedown was ordered under the terms of the Digital Millenium Copyright Act, and said that the takedown was "pursuant to the UMG-YouTube agreement," which gives UMG "the right to block or remove user-posted videos through YouTube's CMS (Content Management System) based on a number of contractually specified criteria." The video was subsequently returned to YouTube, with the reasons for the UMG takedown remaining unclear. YouTube stated: "Our partners do not have the right to take down videos from YT unless they own the rights to them or they are live performances controlled through exclusive agreements with their artists, which is why we reinstated it." Lawyers for will.i.am initially claimed that he had never agreed to the project, but on 12 December, he denied any involvement in the takedown notice.

Legal case

On 19 January 2012 the United States Department of Justice seized and shut down the file hosting site Megaupload.com and commenced criminal cases against its owners and others. Worldwide, the Federal Bureau of Investigation arrested Kim Schmitz (Founder), Finn Batato (CMO), Mathias Ortmann (CTO and co-founder), with Bram van der Kolk arrested by the Organised and Financial Crime Agency of New Zealand. Their bail request was denied in New Zealand court as it was opposed by US authorities on the case. On 20 January Hong Kong Customs froze more than 300 million Hong Kong dollars (US$39 million) in assets belonging to the company.

Basis of indictment

The indictment alleged that Megaupload differed from other online file storage businesses. It suggested a number of design points of its operating model as being evidence of criminal intent and venture:

1. In practice, the "vast majority" of users do not have any significant long term private storage capability. Continued storage is dependent upon regular downloads of the file occurring. Files not downloaded are rapidly removed in most cases, whereas popular downloaded files are retained. (items 7 - 8)
2. Because a small proportion of users pay for storage, the business is dependent upon advertising. Adverts are primarily viewed when files are downloaded and the business model is therefore not based upon storage but upon maximising downloads. (items 7 - 8)
3. Persons indicted have "instructed individual users how to locate links to infringing content on the Mega Sites ... ... have also shared with each other comments from Mega Site users demonstrating that they have used or are attempting to use the Mega Sites to get infringing copies of copyrighted content." (item 13)
4. Persons indicted, unlike the public, are not reliant upon links to stored files, but can search the internal database directly. It is claimed they have "searched the internal database for their associates and themselves so that they may directly access copyright-infringing content". (item 14)
5. A comprehensive takedown method is in use to identify child pornography, but not deployed to remove infringing content. (item 24)
6. Infringing users did not have their accounts terminated, and the defendants "made no significant effort to identify users who were using the Mega Sites or services to infringe copyrights, to prevent the uploading of infringing copies of copyrighted materials, or to identify infringing copies of copyrighted works" (item 55–56)
7. An incentivising program was adopted encouraging the upload of "popular" files in return for payments to successful uploaders. (item 69e et al)
8. Defendants explicitly discussed evasion and infringement issues (69i-l)

The Digital Millennium Copyright Act provides safe harbor for sites that promptly take down infringing content. However safe harbor does not exist if the site has actual knowledge and does nothing about it. in Megaupload's case the indictment asserts DMCA provisions were used for the appearance of legitimacy - the actual material was not removed, only some links to it were, takedowns agreement was approved based on business growth rather than infringment, and the parties themselves openly discussed their infringing activities. The indictment states that Megaupload executives "... are willfully infringing copyrights themselves on these systems; have actual knowledge that the materials on their systems are infringing (or alternatively know facts or circumstances that would make infringing material apparent); receive a financial benefit directly attributable to copyright-infringing activity where the provider can control that activity; and have not removed, or disabled access to, known copyright infringing material from servers they control."

Criminal defence action

Schmitz hired the services of Ira Rothken, an attorney who defended several copyright infringement cases. Rothken claims that the raid was unjustly swift and did not give his client the opportunity to defend himself, quoting a similar case involving YouTube as an example of a completely different turnout.

On 20 January 2012 the prominent Washington, D.C. attorney Robert Bennett confirmed that he will represent Megaupload in the piracy case. Bennett is known for defending Bill Clinton, Enron, and other high-profile cases.

Legal commentators point out that while the indictment may be correct and Megaupload did act as a criminal conspiracy, a number of points in the indictment are based upon selective interpretations and legal concepts (described in one article as "novel theories" of the law) and could be challenged in court. An L.A. Times analysis stated that the author was "struck by how far the indictment goes to find something nefarious"; likewise a TechDirt analysis concluded that while the founder of Megaupload had a significant history of "flaunting the law", evidence has potentially been taken out of context or misrepresented and could "come back to haunt other online services who are providing perfectly legitimate services". Both analyses concur that other evidence could show criminality; the concerns were not irrefutable.

Potential legal concerns suggested:

• The indictment cites lack of a site search as evidence supporting criminality. However in other copyright cases having a site search is suggested as supporting criminality and in Atari v. RapidShare not having a site search was agreed by the court as evidence of responsible activity given that some infringing content might exist and be searched for if one existed. In the case of Isohunt, the presence of a search feature was interpreted as evidence of inducement. TechDirt described this as "court guidance", adding: "To use the lack of a feature, that previously was shown to be a problem, as evidence of a conspiracy is crazy. Damned if you do, damned if you don't."
• The "top 100" list excluded copyrighted titles. The indictment claims this was evidence of concealing, rather than avoiding downloads of, infringing materials.
• Streamed video could not be watched for over 72 minutes without pay. The indictment claims this was intended to monetarise, not discourage, infringing movies (which are usually longer).
• The indictment asserts as evidence that no effort was made to identify infringing files or users, in other words by acts of omission. But federal court rulings repeatedly agree that no duty exists to search these out.
• In MGM Studios, Inc. v. Grokster, Ltd. the Supreme Court looked at "substantial noninfringing uses". A finding of inducement to infringe in that case was based on wider evidence of intent. Mere lack of monitoring was not by itself sufficient to show wrongdoing or inducement.
• Deletion after a limited period of non-download is suggested as evidence of a motive. But file sharing can include large files shared during a short-term legitimate event, and many legitimate sites such as Imgur remove unused content after a while to free up server space. If files were routinely deleted after a short period it could equally suggest legitimate use - because it serves users who share legitimately for a short while, and enforces removal afterwards.
• Much of the indictment, in the words of one analysis, "seems to be based on the simple assumption that encouraging more usage means they must be encouraging infringement", and that there should be evidence of actual wrongdoing, not merely evidence of popular use. Many legitimate files are popular and popularly shared, and an implicit assumption that paid use largely equates to infringing use would need evidence.
• Failure to remove all links following a takedown request is often legitimate. For example the same content may be uploaded by legitimate and illigitimate users. Removing the infringing link does not affect legitimate uploaders. Removing the infringing file would wrongfully cause it to be deleted for legitimate users too.
• Similarly, once child pornography is identified, it is always illegal for all users. But other material may not be. So the fact one had the file removed and the other had links removed may simply be correct conduct.
• While infringing activity may be occurring, it may not be possible (or reasonable to require) the host to know and identify what activity is legitimate or not. File sharing may be used by many content creators.
• Emails show infringing activity took place. But it takes place on other sites such as Youtube.
• The indictment includes money laundering charges. But these include "basic payments" for web hosting, suggesting "lumping in" - adding matters that are in no way illegal to make a case look bad.
• Megaupload had indicated willingness to attend court in the U.S. already, and answer any civil cases.

Retaliatory attacks by 'Anonymous'

The action against Megaupload took place just hours after the mass online Stop Online Piracy Act (SOPA) protest. Shortly afterward, the US Department of Justice's website and a number of other organisations' websites were taken offline following concerted denial of service attacks from activist group Anonymous.

A group spokesperson described the attacks as "the single largest Internet attack in history" in an interview, adding that it was "a terrible case of happenstance that federal agents went after Megaupload only hours after the thousands of sites protesting in an anti-SOPA blackout went back online. Web surfers were by-and-far ready to defend an open Internet ... the feds 'could not have chosen a worse time to take down Megaupload'." He noted that from commencement until the point the government's web servers were offline was a mere 70 minutes.

Besides the US Department of Justice's justice.gov, the Denial of Service attack included Universal Music Group, Recording Industry Association of America (RIAA), Motion Picture Association of America (MPAA), Broadcast Music, Inc. (BMI), and the website of the Federal Bureau of Investigation. “Even without SOPA having been passed yet, the federal government always had tremendous power to do some of the things that they want to do. So if this is what can occur without SOPA being passed, imagine what can occur after SOPA is passed,” Barrett Brown told RT. Anonymous also attacked the website of France's anti-piracy organization.

On 19 January 2012 Anonymous released a statement on Pastebin.com accepting responsibility of the mass attacks on websites including those of RIAA, MPAA, BMI, FBI and others.

Other reactions

French president Nicolas Sarkozy said he was satisfied with the shutdown of the website. He found the site's operators were reaping "criminal profits from the illegal distribution of copyrighted works". "The time has come for increased judicial and police co-operation between states" in the fight against online piracy, he said in a statement.

Web organisations have raised concerns about possible effects of the Megaupload case on the future of file sharing, cloud storage and Internet commerce. Various commentators including John C. Dvorak, Glenn Greenwald, and Julian Sanchez have written on the topic as well, particularly as it relates US government powers to take down a web site without a trial, even without new laws like SOPA.

People who used Megaupload for personal and business storage, such as large audio and video files for family and work, have also voiced their complaints about the fact that they no longer had access to their files on the service.

See also

• Hong Kong
• Companies
• Internet

• File hosting service
• Legal aspects of file sharing

References

1. ^ Department of Justice indictment, on Wall Street Journal's website
2. Arstechnica.com
3. ^ Wire report (19 January 2012). "APNewsBreak: Workers indicted at one of world's largest file-sharing sites, Megaupload.com – The Washington Post". The Washington Post. Associated Press. Retrieved 19 January 2012.
4. "Megaupload.com Site Info". Alexa Internet. Retrieved 2 January 2012.
5. Ira Rothkin,
6. http://wordswithmeaning.org/2012/01/the-online-warthe-internet-reacts-not-so-nicely-to-megaupload-shutdown/
7. "MegaWorld". Archived from the original on 23 July 2011. Retrieved 19 January 2012.
8. ^ "Megaupload FAQ".
10. ^ "Mr". Student. Retrieved 21 January 2012.
11. "Google.com". Google. Retrieved 20 January 2012.
12. Megaupload.com
13. "Is Megaupload dead in Hong Kong?". Hongfire.com. 17 May 2009. Retrieved 20 January 2012.
14. "SKMM Meminta Penyedia Internet Menghalang Akses ke 10 Laman Perkongsian Popular (Malay)". 9 June 2011.
15. India starts blocking file storage websites in a move against piracy ZDNet, 20 July 2011. Retrieved 14 December 2011.
16. Update: Files Sharing Sites Blocked In India Because Reliance BIG Pictures Got A Court Order Medianama, 21 July 2011. Retrieved 23 December 2011.
17. "Feds Shutter Megaupload, Arrest Executives". Wired. 19 January 2012. Retrieved 19 January 2012.
18. "Megaupload founder arrested in NZ, site shut down". 20 January 2012. Retrieved 20 January 2012.
19. Traffic Report: Online Piracy and Counterfeiting January 2011. Retrieved 14 December 2011.
20. Megaupload FAQ Retrieved 14 December 2011.
21. Megaupload Toolbar is a Spyware which Changes Browser Settings, TheCredence.com, 13 August 2008
22. "Megaupload Toolbar on Spyware-Net". Retrieved 8 November 2009.
23. RIAA Label Artists & A-List Stars Endorse Megaupload In New Song 9 December 2011. Retrieved 13 December 2011.
24. Megaupload Mega Song 7 December 2011.
25. Universal Censors Megaupload Song, Gets Branded a “Rogue Label” 10 December 2011. Retrieved 13 December 2011.
26. Megaupload threatens to sue Universal over YouTube video The Guardian, 13 December 2011. Retrieved 13 December 2011.
27. Megaupload to Sue Universal, Joins Fight Against SOPA 12 December 2011. Retrieved 13 December 2011.
28. UMG claims "right to block or remove" YouTube videos it doesn't own Ars Technica, 16 December 2011. Retrieved 16 December 2011.
29. Mystery surrounds Universal's takedown of Megaupload YouTube video CNET, 17 December 2011. Retrieved 18 December 2011.
30. YouTube Apparently Gives Universal Music Group Direct Access to Videos for Easy Removal (Update) TIME, 16 December 2011. Retrieved 17 December 2011.
31. File-Sharing Company Sues Record Label, for a Change New York Times, 13 December 2011. Retrieved 16 December 2011.
32. UMG, MegaUpload Case Gets Even Stranger; Will.i.am Says He Didn't Authorize A Takedown Techdirt. 15 December 2011. Retrieved 17 December 2011.
33. "Four Megaupload personnels arrested in New Zealand".
34. "Jailed MegaUpload Employees Denied Bail".
35. Yung, Chester (21 January 2012). "Hong Kong Freezes Megaupload Assets". The Wall Street Journal. Retrieved 21 January 2012.
36. Why the feds smashed Megaupload
37. Sandoval, Greg (20 January 2012). "Megaupload assembles worldwide criminal defense". CNET. Retrieved 20 January 2012.
38. Cecilia Kang, Megaupload lawyer Q&A on DOJ criminal case, Washington Post, 20 January 2012
39. DC attorney Robert Bennett to represent Megaupload in piracy case, promises vigorous defence (Washington Post, 20 January 2012)
40. Renowned attorney Bennett to represent Megaupload (Associated Press, 20 January 2012)
41. ^ Copyrights: Feds push a few novel theories in MegaUpload case (Los Angeles Times, 20 January 2012)
42. ^ Megaupload Details Raise Significant Concerns About What DOJ Considers Evidence Of Criminal Behavior
43. "Anonymous in revenge attack for MegaUpload shutdown". Financial Times.
44. ^ "Internet strikes back: Anonymous' Operation Megaupload explained – RT". Rt.com. Retrieved 20 January 2012.
45. "Hackers bring down French anti-piracy site". The Local. 20 January 2012. Retrieved 20 January 2012.
46. "Anonymous post on Pastebin".
47. "FBI unplugs top piracy site". The Australian. 20 January 2012. Retrieved 20 January 2012.
48. Antipiracy Case Sends Shivers Through Some Legitimate Storage Sites (New York Times, 20 January 2012)
49. Megaupload shutdown raises new Internet-sharing fears (Washington Post, 20 January 2012)
50. Government takedown of Megaupload leads to new fears (USA TODAY, 20 January 2012)
51. http://www.pcmag.com/article2/0,2817,2399174,00.asp
52. http://www.salon.com/2012/01/21/two_lessons_from_the_megaupload_seizure/singleton/
53. http://www.cato-at-liberty.org/fbi-reminds-us-government-already-has-megapower-to-take-down-websites/
54. 5 Questions, Answers About The Megaupload Case
55. Megaupload wasn't just for pirates: angry users out of luck for now
56. Recovering Legitimate Megaupload Files? Good Luck With That (PC Magazine)

External links

Operated websites (Note: All of these links are currently offline)

• Megaupload
• Megavideo
• Megapix
• Megalive
• Megabox
• Mega Song

Other links

• Why the feds smashed Megaupload
• Why Did the Feds Target Megaupload? And Why Now?
• Looking for Signs of Crime in Megaupload’s Memos

• Use dmy dates from January 2012
• Defunct websites
• Erotica and pornography websites
• Hong Kong websites
• Image hosting
• Internet properties established in 2005
• Companies established in 2005
• 2005 establishments in Hong Kong
• One-click hosting
• Video hosting
• Video on demand services