Why the feds smashed Megaupload

http://arstechnica.com/tech-policy/news/2012/01/why-the-feds-smashed-megaupload.ars

by evo_9 • 15 years ago

198 69 15 years ago

albb0920• 15 years ago

I'm confused, if "knowledge of infringing material and do nothing about it" cause you have no safe harbor. Any big content site like YouTube must know some of it's users are abusing the service, but they're more likely to handle it after there's complain. Or how can you tell whether a file is copyright infringement or not? censoring all uploads, non sense.

sbov• 15 years ago

Huge difference between knowing there's some infringing content somewhere versus reviewing, rewarding, and noting an uploader because of "10+ Full popular DVD rips (split files), a few small porn movies, some software with keygenerators (warez)." Censoring all uploads is hyperbole.

tzs• 15 years ago

"Actual knowledge" without doing anything about it. YouTube does something about it when they acquire actual knowledge of infringement.

flomo• 15 years ago

YouTube is probably not the best example, because they built their userbase on allowing copyright-infringement until they were big enough to negotiate directly with the content owners. If Megaupload had sold out to Google or some other legit business with deep pockets, they would not have been busted.

lani• 15 years ago

The first paragraph makes it very clear. The case is against people who have expensive cars and big television sets.

nekojima• 15 years ago

Finally the DOJ is launching a case against someone in the top 1%!! Perhaps they didn't buy (aka donate to) enough Congressmen & Senators to protect themselves... :-)

nextparadigms• 15 years ago

What's really surprising about all this, besides the very strange and bogus charges, is how they are handling this. They are going after "copyright infringers" like they are some kind of drug cartel leaders.

It's really amazing how things have changed at the top regarding copyright infringement, that they treat copyright infringers as some of the most wanted criminals. What's next? Sending the drones after them? Giving the chair to the Megaupload or ThePirateBay's founders? It's becoming really ridiculous.

drivebyacct22• 15 years ago

>They are going after "copyright infringers" like they are some kind of drug cartel leaders.

And thus far they're about as effective at impeding my access to copyrighted content as they are impeding my access to illegal drugs. Fortunately trying to limit access to copyrighted material doesn't drive people's money to possibly terrorist organizations, but that's another issue.

smokinn• 15 years ago

Fortunately trying to limit access to copyrighted material doesn't drive people's money to possibly terrorist organizations, but that's another issue.

Well, not yet at least. But if they continue making the penalties more and more draconian then only the hardened criminals will get into that lucrative space and the money will be going to violent groups.

bermanoid• 15 years ago

And thus far they're about as effective at impeding my access to copyrighted content as they are impeding my access to illegal drugs.

Seriously:

1) Google "watch 30 rock online"

2) Click first link

3) Click "Search links" for newest episode of 30 rock

4) Go to second to last page of results (just because the first and last page of results are always fake, as a rule - you always shoot for the middle)

5) Click random link

6) Watch Dove Soap ad

7) Watch tonight's episode of 30 Rock

Replace "30 rock" with pretty much any other TV show (at least one that's been over for more than 30 minutes) or movie, and the same approach will get you to a working video, though you may have to click a few fake links before finding a real one.

Is there a solution to this? Idunno. I do know that the "overseas" thing is a total red herring - in this particular example, that "first link" that I clicked was sidereel.com, registered to the Rovi Corporation in Santa Clara, CA. Completely and utterly within the jurisdiction of the US government, and clearly linking to pirated versions of almost every TV show that's on the air right now, and pretty much nothing else. If linking to content was such a clear and easily prosecutable crime, I'd think they'd be taking down sites like that, too, rather than leaving them active.

I can't help but wonder if perhaps there's not such a legal consensus on how criminal sites like Sidereel are, and that's why they're trying to go after the endpoints that sites like this point to instead, as well as passing laws that would specifically make linking to them illegal.

mc322• 15 years ago

I know what you are saying, but I think this is the line of thought content owners realize too.

I think it's because of that facility that they are seeking more effective methods of mitigating the proliferation non-authorized distribution of copyrighted material.

Many people are arguing the same thing. Access to unauthorized distribution of copyrighted material is trivial. Their methods at controlling the floodgates are ineffective. They quite realize that and that's why they're attempting to have congress pass a blunt tool. They want to have a control mechanism which is as easy for them to use as it is for people to find illegal content. I don't thin they're going to get it, but I believe that's the motivation behind their efforts.

They want some symmetry.

paul9290• 15 years ago

What confuses me even more is they applied US laws to those who live outside the US?

So the law of America and desires of the copyright cartel trump every other country's laws?

Overall this seems like a big orchestrated F U to the opponents of SOPA (the Internet).

Really if they provided us, what we all are screaming for - better access and selection to their product on the Internet, MegaUpload and future services wouldn't be a concern. Ridiculous!

Updated: Further some of those behind MegaUpload are artist's of the RIAA.....

wmf• 15 years ago

MegaUpload had servers in the US and accepted money from people in the US. Extradition is hardly a new concept.

pauldmartin• 15 years ago

Not to mention megaupload has filed lawsuits in US courts...

nitrogen2• 15 years ago

That's because Universal is in the US. Should filing a lawsuit against a US company subject the plaintiff to US jurisdiction in unrelated matters?

ordinary• 15 years ago

The Berne Convention, signed by pretty much the entire world, including all of the countries involved with this case, states that "the copyright law of the country where copyright is claimed shall be applied".[0]

___

[0] http://en.wikipedia.org/wiki/Berne_convention

rmc• 15 years ago

Extradition and co-operation between national police forces is not new. They probably broke laws in New Zealand aswell.

guelo• 15 years ago

It has been apparent for a while now that Obama's DOJ takes orders from the MPAA.

nostromo• 15 years ago

What's clear now thanks to this whole affair is that PIPA and SOPA are completely unnecessary. Megaupload is the stated target of those bills. Here we are, with no new laws passed, seeing infringers charged and domains taken offline.

Why isn't the media playing up this angle more? It writes itself.

itsnotlupus• 15 years ago

And it only took almost two years of investigations.

Think of how many copyrights could have been saved if only some new draconian laws had allowed swifter actions.

abraxasz• 15 years ago

"And it only took almost two years of investigations."

Yep well I consider it a small price to pay, if the alternative is handing some of my liberty along with internet security over to the government and/or the entertainment industry.

Now obviously I'm not the one paying the price, so I do understand why "content owners" are not satisfied with the status-quo..

firefoxman12• 15 years ago

Wow, I didn't even connect the two. That's a great point. Now that I think about it, I see it as proof of two things:

1. It just takes enforcement of current laws, not passing of new ones, to fight piracy.

2. This really proves that SOPA is the result of heavy lobbying by companies that think passing a bill fixes their problems, because if the US government saw piracy as such a problem, there would be way more takedowns of companies like Mega Conspiracy and way less censorship bill-passing.

rickmb• 15 years ago

It's a classic move.

Yes, people will start claiming PIPA and SOPA are unnecessary, and they may be taken of the table. Hurray!

Of course, this now means that much of the evil stuff in PIPA and SOPA is already reality, but instead of being angry about it, we're now breathing a sigh of relief.

In the mean time, the feds will start taking down sites left, right and center, and across the globe, without any form of due process. And we'll be cool with it, because things could have been so much worse with PIPA and SOPA...

We're not seeing "infringers charged" here. Megaupload is gone. The entertainment industry has been playing judge and jury, with the feds as their executioners, and the justice department giving it a thin veneer of legal process.

PIPA and SOPA are more of less a reality without the laws actually being passed. That in itself is way scarier than the actual content of those laws. And thanks to this wonderful sleight of hand, it will now be perceived as if it were a good thing.

Maybe not yet checkmate, but definitely: check.

alexqgb• 15 years ago

In that regard, the play has been a lot like the NDAA. In reality, we're already detaining Americans indefinitely without charge - and those are the 'lucky' ones. With others, we simply dispatch drones to assassinate them.

"All this bill does is codify existing practice" was the same argument used in that case. "And anyway, there are rigorous procedures in place."

Rigorous secret procedures, that is. Kind of like the rigorous procedures that pertained to water-boarding.

JoachimSchipper• 15 years ago

While MegaUpload has indeed been destroyed, it is not obvious that the judge will agree with those actions - after the ICE domain seizures, Rojadirecta brought suit against the US government, apparently thinking it can win (see e.g. http://www.techdirt.com/articles/20110613/12021514673/rojadi...). The DoJ would like PIPA/SOPA to be reality, but that doesn't mean that it is.

Iv• 15 years ago

That is why everyone point at victory in the SOPA fight, I say that there won't be victory unless a constitutional amendment protects our rights and we don't have to take arms against a new law every year.

VMG• 15 years ago

Wait, I think we were protecting Google and Wikipedia, not Megaupload?

earbitscom• 15 years ago

What's clear is that, under current laws, you can generate 150M+ before current laws can stop you. Again, not saying SOPA is the answer, but let's not ignore that these guys operated for years like this. If they're proven innocent, it says one thing. If not, it proves that the burden of proof and the procees takes far too long to be effective.

jasomill• 15 years ago

What's clear is that, under current laws, you can generate 18000M+ before current laws can stop you. Again, not saying revamping the SEC is the answer, but let's not ignore that Bernie Madoff operated for years like this. If he had been proven innocent, it would have said one thing. Since he was not, it proves that the burden of proof and the process takes far too long to be effective.

Given the connections between Megaupload and major celebrities affiliated with the recording industry, and between the industry and government officials, it'll be very hard to draw conclusions from any of this until far more facts come out, if ever.

matwood• 15 years ago

This is no different than many other criminal enterprises. If we took your logic and applied it everywhere SOPA style then we all would not be able to leave the house or have computers. Look at where your logic has gotten us with the war on drugs.

The process has to be balanced between catching the criminals and public good. Right now there are laws in place and due process to stop pirating. Megaupload showed they worked.

rjd• 15 years ago

Because the media are amongst those behind it remember.

The target of those bills is greater than just online piracy, I think you'll find they are capable of being used for all sorts of counterfeiting and unorthodox competition. For example theres a site that has been a buzz with some of my friends, selling knock off games workshop models. Those laws can be used to block those sites as well.

Its all about maximising profits, and protecting markets. Hence the current methods eat into said profits to enforce and are unacceptable for profit creation.

batterseapower• 15 years ago

The end of the article seems to say that Megaupload is US-based. As I understood it, many of the provisions in SOPA were designed for use against non-US sites. I suppose that if Megaupload had operated purely on foreign soil the US may not have been able to bring this case.

code_duck• 15 years ago

'the media'... I believe that generally means companies owned by corporations who wrote SOPA and PIPA.

aqme28• 15 years ago

There's a key distinction here between what happened to Megaupload and what can happen under SOPA:

The feds took a long time to gather the evidence they needed for a warrant before they took Megaupload down.

Under SOPA, all that would be needed is the accusation of copyright infringement alone.

That's a pretty important distinction.

jean_valjean• 15 years ago

When I read the details of the story, I feel like this isn't meaningfully different from a few years back when there'd be warehouses of DVDs or VHS tapes,and hundreds of duplicators seized along with bags of cash.

The medium change, but the crime appears to have remained essentially the same.

There were two interesting things to me:

1) the email from Kimble to PayPal where he was clearly trying to cut off PayPal to his competitors whilst keeping it for himself; trying to convince PayPal that they shouldn't do business with those other guys.

2) the type of evidence they have makes me wonder if it was an inside job, or perhaps even a setup by a competitor who hacked into their systems. It doesn't feel like a case the FBI would pick up without a strong bootstrap.

BiosElement3• 15 years ago

You mean besides the MPAA/RIAA bribes?

charliesome• 15 years ago

> and they claim that Megaupload purposely offers no site-wide search engine as a way of concealing what people are storing and sharing through the site.

So if my site doesn't have a search engine, I'm at risk of being seen as purposely concealing what my users are doing?

oliciv• 15 years ago

And if it does, you're making it easier for people to find copyrighted material

nitrogen2• 15 years ago

So I guess their indie music distribution site, MegaBox, isn't going to be released after all.

And what does their choice of license plate have to do with their guilt or innocence, anyway?

firefoxman12• 15 years ago

It doesn't; just makes for better journalism I guess.

narkee• 15 years ago

In order for the MPAA/RIAA claim that copyright infringement causes large monetary damages to ring true, we must see profits increase in these industries.

If profits do not increase, then Megaupload did not impact profits.

mc322• 15 years ago

Not necessarily. There are long term trends, cyclical trends, write-offs, etc. I don't see how one can look at a single indicator, profits, and then have insight into detail. It's a rather tenuous assertion.

BiosElement3• 15 years ago

Tell that to the MPAA then next time they claim piracy is hurting their business. :)

thomasjoulin2• 15 years ago

For me, there is a big difference between what I considered a garbage site like Mega Upload, and a site like The Pirate Bay. The first paragraph of this article is appalling. While I won't be surprised that TPB owners make a lot of money, the description of the cars, the aliases, looks like mafia guys coming from movies. TPB stands for civil liberties, right of sharing stuff like Wikileaks files in addition to Hollywood movies... I don't know, I may be wrong, but I won't miss Megaupload.

roel_v• 15 years ago

"TPB stands for civil liberties"

...seriously? Because the Wikileaks files wouldn't have made it out into the world without the pirate bay? Please.

thomasjoulin2• 15 years ago

I didn't say "Only TBP stands for civil liberties". But they do have a philosophy (and are willing to make a point more than make tons of cash and spend it in yachts and funny car plates), which is a big difference with what Kim "Dotcom" is showing... Which explains why I won't miss his site (or him)

GigabyteCoin2• 15 years ago

I still don't get it. Why couldn't the same be done to thepiratebay? Because the FBI can't access their internal emails? That's it?

If I recall, the pirate bay "thumb their noses at international laws, all while pocketing significant advertising revenues from trafficking in free, unlicensed copyrighted materials." as well.

rimantas• 15 years ago

I don't think that FBI acting in Sweden would be perceived in any positive light…

mahyarm• 15 years ago

And new zealand is much different?

GigabyteCoin2• 15 years ago

Oh ok then, so the ONLY thing that Megaupload did wrong was having file servers inside the United States?

furyg3• 15 years ago

The pirate bay doesn't host content. Megaupload did.

guard-of-terra• 15 years ago

"They had not one but three Samsung 83" TVs, and two Sharp 108" TVs. Someone owned a "Predator statue." Motor bikes, jet skis, artwork"

The list is awesome. They probably compiled very similar lists in 1917 in Russia about the possessions of capitalist pigs: the lists justified expropriating the listed grossly excessive goods into hands of workers and peasants.

That's what the article implies: they were too thick and therefore got expropriated. Raskulachili!

Kadin• 15 years ago

That's pretty much the situation. But I think the lesson is the other way around: if you make $150M and don't share it with the fatcats in Washington through some strategic campaign contributions to protect your business model, prepare to have some Federal Acronym Agency come busting down your door.

If Megaupload had played ball and used some of that cash to buy a few Representatives and maybe a Senator or two, they'd probably be fine.

That's how business works today.

sabret00the• 15 years ago

I really didn't know that ARS partook in smear campaigns like this. This is so utterly one sided that it's disappointing. Simple fact of the matter is, copyright holders could use an abuse tool to remove content and had said content removed.

I mean, they arrested the graphic designer!...

koevet• 15 years ago

And how about filesonic.com, hotfile.com, fileserve.com, wupload.com and hundreds of other sites that follows the same megaupload model?

JumpCrisscross• 15 years ago

I think the salience of the article is in how Megaupload became conspicuous after their ad campaign. That made them a focal point of the entertainment industry's wrath.

Mordor2• 15 years ago

'piracy' is about control and the failure of the media industry to manage their product. Megaupload's only crime is to be outside of that control. I just don't understand why the media industry makes a product it can't control - perhaps they should be making something else?

jonhendry• 15 years ago

And, what, stop making music or movies or TV shows?

That's heartless. What about the millions of people who have decided they are entitled to free entertainment for life? What are they going to do with all that free time that they won't be spending in front of a TV stuffing their faces with cheetos? They'll be lost, adrift!

Mordor2• 15 years ago

Lol - maybe a different business model would result in a better product?

JBiserkov• 15 years ago

How not to die if your business model is (borderline) illegal:

-delete your chat logs and email -don't have sensitive(incriminating, personal) information in logs at all (see 37sig story) -don't use your own (illegal) product -"outsource" the code to a "separate" entity, obfuscate it, claim ignorance and trade secret -donate to senators, judges, prosecutors, presidents

All pretty obvious, I'm sure you can think of more, if your Mazerati depends on it.

o2sd• 15 years ago

Actually, this article reads like a play book for the next group who wants to create 'MegaUpload2'. 1) Secure your servers 2) Encrypt your email 3) Keep a low profile 4) Hide your identity 5) etc

GBKS• 15 years ago

Wouldn't this action only be valid if MegaUpload was only used for illegal activity? Obviously, there were copyrighted files, but I am pretty sure (and as somebody else mentioned) there was also plenty of legal activity. This legal side of the business was also destroyed, which does or seem legal.

JulianMiller520• 15 years ago

"Even the graphic designer, 35-year-old Slovakian resident Julius Bencko, made more than $1 million in 2010 alone." ugh what a disgusting comment as though graphic designers shouldn't be paid for their work regardless of the status of the company.

a9• 15 years ago

Megaupload had servers in the USA with Carpathia Hosting. That makes them subject to US law. SOPA/PIPA are aimed at situations where the servers are all offshore and the business has no connection to the US.

Why the feds smashed Megaupload

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