Megaupload Closure Leaves Cloud Users in Mega Lurch

The shutdown of file sharing website Megaupload last week has left thousands – potentially millions – of users in the lurch as access to their files has been indefinitely cut off by federal officials.

The 72-page indictment against the file sharing website “illuminates a cavalier operation of opulence, carelessness, and tons of money,” Gizmodo reported, pointing out that other similar companies – YouSendIt, MediaFire and Hulk Crew – are all still in business.

But apparently Megaupload’s ego was too “mega” for its britches. The company flaunted the fact that it got rich off of copyrighted material – from Simpsons episodes to 50 Cent albums. The megasite consumed an astounding four percent of all traffic on the Internet with 50 million daily visitors, according to reports.

An indictment accused Megaupload.com of costing copyright holders at least $500 million in lost revenue, according to The Associated Press (News - Alert).

For now, the only thing that is “mega” about Megaupload are the “mega” charges leveled against Kim Dotcom, who was arrested during his 38th birthday party at his luxurious Auckland mansion, The Sydney Morning Herald said.

The home page for Megaupload currently reads: “The domain name associated with the website Megaupload.com has been seized pursuant to an order issued by a U.S. District Court. A federal grand jury has indicted several individuals and entities allegedly involved in the operation of Megaupload.com and related websites.”

In addition to copyright infringement and racketeering, Dotcom and his cronies were allegedly committing money laundering, the indictment said:

“Members of the Enterprise and their associates committed money laundering, attempted to commit money laundering, and conspired to commit money laundering to facilitate and expand the Enterprise’s criminal operations.”

A judge said he will rule Tuesday or Wednesday on whether Dotcom will be granted bail, according to FoxNews.

While Dotcom has a rather large legal battle ahead, the collateral damage at this point in not clear. Although a fair amount of Megaupload is crammed with illegal content, there are thousands – potentially millions – of legit users that have been cut off from the storage site with no notice.

As data protection laws are set to be revamped by the European Union, which is bound to affect U.S. laws, what we are left with is really a grey area, according to TMC (News - Alert) CEO Rich Tehrani.

“It is unclear which sites will be future targets in-part because targets are determined by what users determine they want to share,” he said in a blog post. “So if millions of users tomorrow decide they want to use a specific cloud vendor for the purpose of setting up a new age Napster to share music and movies, the site could be targeted and taken down – along with the legitimate files stored on the service.”

Explained another way, we are in legal cloud limbo. And it is worth stating firmly that the federal government is casting a shadow over cloud computing – one of the hottest sectors of tech, receiving perhaps the most funding and doing the most hiring. I cannot think of anything more self-destructive for a society looking for economic growth to be doing.”

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