One day after a strong reaction by major Internet players appears to have stalled Congressional action on the SOPA (Stop Online Piracy Act) legislation aimed at controlling Internet piracy, the FBI shut down the Megaupload Website, one of the Web’s most popular “locker services” sites. If the FBI is successful in shutting down the New Zealand-based site, it will certainly lead many to question the need for the SOPA and its sister act PIPA (Protect Intellectual Property Act), which are opposed by many Internet organizations because of censorship and other concerns about heavy-handed governmental control of the Net.
The FBI’s attack on the New Zealand-based Megaupload site provoked an immediate reaction from the hacker group Anonymous, which shut down the Department of Justice, FBI, Motion Picture Association (MPAA) and Recording Industry (RIAA) Websites. A lawyer for Megaupload vigorously denied that the site was involved in Internet piracy.
Megaupload has been accused by industry analysts of causing more than $500 million in damages to property rights holders. Most of the pirated material that is at the crux of this case is motion picture content, though comic book files have supposedly been shared via Megaupload as well. Four of seven Megaupload principals including founder, Kim Dotcom (a dual German and Finnish citizen, born Kim Schmitz) were arrested. The New York Times reports that in 2011 Kim Dotcom earned $42 million dollars, his share of Megaupload’s $175 million in advertising revenues. Authorities seized some $4.8 million in luxury and classic cars at Dotcom’s estate outside of Auckland, New Zealand.
The fact that the FBI was able to obtain an indictment and arrest warrants involving a “locker” site based in foreign countries (New Zealand and Hong Kong) would appear to indicate at least the possibility that the authorities have not exhausted all the possibilities of prosecuting Internet pirates under existing laws, and calls into question the need for further legislation, especially if that legislation would have a chilling effect on Internet economic activity.