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On 19 January 2012, the United States Department of Justice seized the domain names and closed down the sites associated with Megaupload after the owners were arrested and indicted for allegedly operating as an organization dedicated to copyright infringement.[3] Subsequently, HK$330 million (approximately US$42 million) worth of assets were frozen by the Customs and Excise Department of Hong Kong.[4] The company's founder, New Zealand resident Kim Dotcom, has denied any wrongdoing, and the case against Dotcom has been the subject of controversy over its legality.[5] In 2017, a New Zealand judge ruled that Dotcom should be extradited to the United States, but Dotcom remained at liberty in New Zealand pending the results of an appeal.[6] On 5 July 2018, the New Zealand Court of Appeal found Dotcom and three of his former colleagues were eligible to be extradited to the U.S. authorities. His lawyer said they would appeal to the New Zealand Supreme Court.[7] The shutdown of Megaupload led to denial-of-service (DoS) attacks on a range of websites belonging to the U.S. government and copyright organizations by the hacktivist group Anonymous.[8][9]

On 19 January 2013 (2013-01-19), Megaupload was relaunched as Mega under the domain name mega.co.nz (later moved to mega.nz, and then to mega.io). The re-launch date was chosen to coincide with the first anniversary of Megaupload's takedown by the U.S. Federal Bureau of Investigation.[10]

Mega Upload

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Megaupload also released its upload/download manager, Mega Manager,[20] a download manager that featured a link-checker for Megaupload links as well as options to manage uploaded files, and to access the online control box that was on Megaupload.

Megakey was an adware application which removed bandwidth 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 allow the substitution of ads on third party websites they visited with those of Megaupload.

Although incorporated in Hong Kong, the company did not operate there. From 2009 onward, users with Hong Kong IP addresses were banned from accessing the site. The reason for the block was never disclosed by Megaupload,[22] but Hong Kong customs officials have suggested that the block was an attempt to hinder law enforcement investigation.[23]

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.[24] Megavideo was also intermittently blocked in the United Arab Emirates due to pornographic content being accessible through the service.[24]

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 throttled connection speeds.[25]

In July 2011, access to Megaupload and Megavideo was blocked in India for Reliance Entertainment customers,[26] after a court order was obtained, citing illegal copies of the 2011 film Singham on file hosting sites.[27]

On 19 January 2012, U.S. federal prosecutors in the state of Virginia shut down Megaupload and laid charges against its founder Kim Dotcom and others for allegedly breaching copyright infringement laws.[28][29]

In January 2011, MarkMonitor published a report entitled "Traffic Report: Online Piracy and Counterfeiting," which said that Megaupload and Megavideo were, along with RapidShare, the top three websites classified as "digital piracy," with more than 21 billion visits per year.[30] 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."[31] Mark Mulligan, an analyst at Forrester Research, pointed out that the number of visits did not necessarily indicate the number of downloads of illegal material.[32]

Megaupload Toolbar was said[by whom?] to redirect users to a custom error page when a 404 error occurred in the user's browser. It was also said to contain spyware.[33] FBM Software said that the Megaupload toolbar is free of spyware.[34]

When a file was uploaded to Megaupload and another file with the same hash was already found to exist, the uploader would be asked if they would like to link to the already existing file. Therefore, a single file may have contained multiple links to it. This caused some controversy, since when a DMCA takedown notice was issued, only the link that was provided (but not necessarily the file itself) was removed.[35]

On 9 December 2011, Megaupload published a music video entitled "The Mega Song," showing artists including Kanye West, Alicia Keys and will.i.am endorsing the company.[36] Snoop Dogg appeared in earlier versions of the video.[37][38][39] The music video was also uploaded to YouTube,[40] 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."[41] 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.[42][43] UMG denied that the takedown was ordered under the terms of the Digital Millennium 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."[44] The video was subsequently returned to YouTube, with the reasons for the UMG takedown remaining unclear.[45] 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."[46][47] Lawyers for will.i.am initially said that he had never agreed to the project, but on 12 December, he denied any involvement in the takedown notice.[48]

On 19 January 2012, the United States Department of Justice seized and shut down Megaupload.com and commenced criminal cases against its owners and others. The lead prosecutor, Neil MacBride, had formerly served as vice president, Anti-Piracy and General Counsel, of the Business Software Alliance, where he oversaw global anti-piracy enforcement and copyright policy. On 20 January Hong Kong Customs froze more than HK$300 million (US$39 million) in assets belonging to the company.[49]

Acting upon a US Federal prosecutor's request, the New Zealand Police arrested Dotcom and three other Megaupload executives in a leased $30 million mansion at Coatesville near Auckland on Friday, 20 January 2012 (NZDT, UTC+13).[50] This was pursuant to a request from the U.S. Federal Bureau of Investigation that the four be extradited for racketeering and money laundering.[51] The raid was timed for the birthday celebration of Dotcom.[52] Assets worth $17 million including art works and cars were seized. The four men arrested were Kim Dotcom (founder; 38 years old, from Germany), Finn Batato (CMO; 38, from Germany), Mathias Ortmann (CTO and co-founder; 40, from Germany) and Bram van der Kolk (29, from the Netherlands).[53][54][55][56]

On 10 July 2012, a decision on whether Kim Dotcom and other Megaupload employees should be extradited to the United States was delayed until March 2013, in order to allow further time for legal arguments to be heard.[66] New Zealand judge Justice Helen Winklemann said that U.S. authorities would need to provide evidence of "Internet piracy" before Dotcom was extradited.[67]

Media reports covering the case highlighted several points from the indictment used to support claims of illegal activity. The indictment provided instances alleged to show criminal behavior, as well as indicating design points of Megaupload's operating model as being evidence of criminal intent:[1]

Legal commentators point out that while the indictment may be correct and Megaupload might have acted as a criminal conspiracy as said, 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[76]) and could be challenged in court. A Los Angeles Times analysis stated that the author was "struck by how far the indictment goes to find something nefarious";[76] likewise a TechDirt analysis concluded that while the founder of Megaupload had a significant history of "flounting 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".[77] Both analyses concur that other evidence could show criminality; the concerns were not irrefutable. The legal concerns included:

Prosecutors said in the indictment that Megaupload was not DMCA compliant, and cited the example of an alleged infringer on the site known as "VV." Over six years, VV had allegedly uploaded nearly 17,000 files to Megavideo.com, resulting in more than 334 million views. According to prosecutors, although numerous takedown e-mails had been sent, none of the files had been deleted.[81]

In a television interview with 3 News, Kim Dotcom said he was not a "piracy king," and said that Megaupload had applied the provisions of the DMCA and went beyond it, by giving copyright holders direct rights to delete links. He also said that the indictment relied on a malicious interpretation of technical issues to construe its claim of criminal intent, and that there was significant legal use of Megaupload.[82]

Dotcom initially hired Washington, D.C. attorney Robert Bennett, who had confirmed he was going to represent Megaupload in the copyright infringement case.[83][84] On 22 January 2012, Bennett withdrew from the case due to a conflict of interest with another client.[85][86] As of 23 January, attorney Paul Davison was quoted as representing Megaupload's founder, Kim Dotcom, in New Zealand.[87] At the end of April 2012, a controversy emerged over legal representation. The law firm Quinn Emanuel, retained by Megaupload to argue for the retention of Megaupload's data, said in a motion filed to the court that there was a concerted effort by the United States Department of Justice to deny Megaupload fair legal representation. In the brief, Quinn Emanuel alleged that several law firms dropped out of the case after the DoJ informed them of potential conflicts of interest, arguing that they wanted to call clients of the firms as witnesses. Given the size of the Megaupload, Quinn Emanuel said this "conflict of interest" argument could be applied to any law firm with experience in intellectual property rights, denying Megaupload experienced representation in a case where both law and technical issues are involved. Quinn Emanuel received such a letter but rejected the DoJ's arguments.[88]Techdirt argued that while the founder of Megaupload had a significant history of "flouting the law", evidence had potentially been taken out of context or misrepresented and could "come back to haunt other online services who are providing perfectly legitimate services".[77] Eric Goldman, a professor of law at Santa Clara University, described the Megaupload case as "a depressing display of abuse of government authority". He pointed out that criminal copyright infringement requires that willful infringement has taken place, and that taking Megaupload offline had produced the "deeply unconstitutional effect" of denying legitimate users access to their data.[5] Other legal commentators have expressed more skepticism toward Megaupload's likelihood of defending against charges of aiding and abetting copyright infringement on "willfulness" grounds if the allegations of fact in the indictment turn out to be true.[79] ff782bc1db