The Chilling Effects Of The MegaUpload Seizure

The seizure of MegaUpload’s US servers, their domains, and the arrest of the top eight figures behind the company that happened only a few days ago but it is already causing chilling effects across the web. MegaUpload was one of the most trafficked sites on the web, and whilst the service was notably used by copyright pirates, founder Kim Dotcom and his board maintain that the service complied with the US DMCA – taking down offending files when requested by the copyright holder – and so deserve the safe harbour protections of that law.

The FBI investigators obviously disagree with that argument, claiming that the site promoted illegal file sharing using its services and also only removed individual links to files to issued a DMCA takedown, rather than removing the files themselves identified by hash values or similar. However, until this case is resolved, other file hosting websites have made moves in order to protect themselves from any similar prosecution.

Uploaded.to was the first site to make changes after the arrests, and has blocked US access to the site – attempting to avoid the long arm of US law enforcement that gained arrests in countries across the globe from New Zealand to Europe for breaking US law over the internet. By actively blocking US users, it would be a much harder case for US prosecutors to show that US law would have any jurisdiction over their business.

FileSonic has taken the drastic measure of preventing the sharing of all files using its service and has even taken down its Facebook page. This is a file hosting site that was designed as a way for users to share files, and so disabling this part of its service is a huge change. Some have argued that FileSonic and some of its competitors promote the illegal distribution of files by paying uploaders for every thousand downloads their files receive (something MegaUpload also offered until the summer of 2011), with copyrighted content being some of the most popular downloads – but this has never been tested in the courts. Moreover, FileSonic announced an agreement with Vobile back in December which would have screened the incoming uploads for copyrighted material – not something you would imagine doing if you were promoting piracy.

These are only two services that offer file sharing out of the many options users currently have, but as the MegaUpload case goes to trial it will be interesting to see how these chilling effects will widen to other services that host content online. If pirates move to sharing copyrighted content via media darlings Dropbox or Box.net – will the owners of these services also be facing criminal prosecution? Or will file hosts simply stop offering the simple sharing of files they host – putting web users back to the awkward unreliability of attaching large files to email? Or will file hosts simply move all their operations and servers abroad in order to avoid claims of US jurisdiction? Only time will tell.

For the time being, however, there are still numerous options for users to backup, upload, and share files:

If you are looking to backup files to the cloud, we recommend Dropbox and Box.net

UPDATE: FileServe has followed FileSonic by only allowing users download content that they have uploaded themselves, effectively turning the file sharing service into a file backup service. UploadBox has announced it will be shutting down, MultiUpload appears to be down, and video sharing sites VideoBB and Videozer seem to have cleared their databases of illegal content – proving, if anything, that they could have done this previously.

UPDATE 2: X7.to has closed its doors, and FileJungle and UploadStation have followed FileSonic and FileServe in stopping 3rd party downloads. The file sharing space has become notably smaller in the last 48 hours.

UPDATE 3: Rapidshare are not concerned about the MegaUpload case, and say they have always been transparent about their business which they align with Dropbox and Microsoft’s SkyDrive rather than MegaUpload. They also have an appointed DMCA agent, act swiftly on copyright notifications, and have a dialogue with those in the political system.
MediaFire CEO, Derek Labian, has also said that he is not too worried about the fallout from the MegaUpload case as “unlike Megaupload, MediaFire doesn’t incentivize piracy” and again aligns MediaFire with Box.net and Dropbox as a “legitimate business targeting professionals”

UPDATE 4: FileFactory have said that they have “been online since 2005…[and] have always operated with legitimate business model and practices”. Their slower than usual service is the result of their traffic increasing threefold in the days since the MegaUpload seizure and the resultant fallout.