File-sharing website, MegaUpload.com has been shut down effective Janaury 19th, by federal prosecutors claiming that the website has violated piracy laws. The website, founded by entrepreneur (and convicted criminal) Kim Schmitz, was until being shut down, the #1 file sharing website. Much of its revenue was made from performance-based and affiliate marketing advertisements placed on the website, providing one of the top display sources for the industry.
The indictment accuses the site of being actively involved in costing over $500M in lost revenue from pirated films and other content. Seven people were named in the complaint, and four people have already been arrested. They have been charged with a variety of crimes including piracy, conspiracy to commit copyright infringement, money laundering and even racketeering (organized crime).
The three people arrested, were arrested outside the United States by New Zealand Police, who arrested them based on provisional arrest warrants.
Megaupload had high-profile support from celebrities, musicians and other content producers, including Kim Kardashian, Alicia Keys and most famously Kanye West. The acting CEO of the company was revealed to be, just today, before the announcement of the prosecution, Swizz Beats, the husband of Alicia Keys.
In response to these allegations, the company has said “The fact is that the vast majority of Mega’s Internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch.”
What makes this lawsuit interesting, is that despite enormous protests on the 19th against laws that addressed this, it seems that government is shutting down websites without court orders, based on accusations, effectively preventing them from continuing operations.
