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One of the most popular file-sharing sites, Megaupload has been shut down on charges that it is violating piracy laws.

The indictment alleges that the website and a shell company associated with the website, Vestor Limited, caused an estimated half-billion dollars in copyright losses and made an estimated $175 million in proceeds. The website was established in 2005 and at one point ranked as the 13th most visited website on the Internet.  The feds indicted the site’s founder, Kim Dotcom, a.k.a. Kim Schmitz, a 37-year-old resident of Hong Kong and New Zealand. He was arrested in New Zealand by New Zealand authorities.

One of the main thrusts of the argument is that Megaupload offered credits/payment for uploading material and having people download them. This according to the Justice Department promoted the uploading of copyrighted works.

Their other contention which in my opinion is a bit weak is that Megaupload hid infringing content by not having a public search function. It could be argued conversely that if Megaupload offered a public search function, it would have ‘facilitated downloading of copyrighted content’ so it appears to be one of those damned if you do and damned if you don’t scenarios.

The timing of Megaupload’s shutdown a date after the anti-piracy law protests has triggered debate as to the necessity of the SOPA given that existing laws seemed to have provided a remedy.

The shutting down of Megaupload has spurred hacker group Anonymous to launch a series of attacks against sites such as the Department of Justice, RIAA, Universal Music, the U.S. Copyright Office, Broadcast Music Inc. and the Motion Picture Association of America. The FBI website was also targeted although it appears to remain operational.

“The government takes down Megaupload? 15 minutes later Anonymous takes down government and record label sites,” the Anonymous Twitter feed read.

The next Tweet posted:”Megaupload was taken down w/out SOPA being law. Now imagine what will happen if it passes. The Internet as we know it will end. FIGHT BACK.”

Another interesting factoid is that prior to its shutdown, Megaupload’s consumption of bandwidth was outpacing Dropbox and numerous other business-focused file-sharing services at corporate businesses, according to a new study by Palo Alto Networks which monitored a week’s worth of traffic traversing the Internet gateway at 1,636 businesses around the world, mostly at medium to large businesses with at least 2,500 users.

Megaupload usage was found on the networks of 57 percent of the 1,636 organizations in the study. That’s quite a bit less than the 76 percent of networks with Dropbox traffic, and equal to the 57 percent of networks that have Box.net traffic. However, in terms of bandwidth, Megaupload accounted for 20,405 gigabytes, compared to 17,573 for Dropbox and just 86 gigabytes for the business-focused Box.net. The Dropbox numbers, indicating lots of traffic but a smaller average file size, suggest a mix of personal and work usage. Another consumer-oriented service accounting for a chunk of traffic was Filesonic, which appeared on 52 percent of networks and consumed 4,058 gigabytes.

Naughty workers!

Sources:BBC, ArsTechnica,PCWorld

SOPA and PIPA are two bills milling around United States congress right now, and if they are signed into law the internet as the world knows it could be significantly altered for the worse. Understanding the bills can be difficult, but basically they will harm internet innovation by shutting down sites that are user driven, censor and blacklist popular U.S. websites, and generally kill new sites like YouTube and Wikileaks. If that sounds bad, take a look at the various ways in which these bills could affect users of American websites.

The U.S. President and his administration have stated that they “will not support legislation that reduces freedom of expression, increases cybersecurity [sic] risk, or undermines the dynamic, innovative global Internet.” That said, President Obama has not yet promised to veto the bills should they pass through the house and senate, a move that could effectively stifle many supporters of the bills. Recently scandalized media titan Rupert Murdoch responded by Tweeting: “Nonsense argument about danger to Internet. How about Google, others blocking porn, hate speech, etc? Internet hurt?” Perhaps it is no surprise that Murdoch would side with entertainment companies like the MPAA and the RIAA, but what may be more surprising is congress’ broad approval of the bill.

So how has the internet reacted to these bills? In protest of the bills’ egregious goals, sites like Reddit, Wikipedia (English), Google, Mozilla, and hundreds of other sites have gone dark today or otherwise joined ranks to stop them. American citizens are urged to contact their representatives and tell them to get their act together before it’s too late, and non-American users of these sites are asked to learn and share as much about these bills as they can. Who knows how many other countries might adopt similar policies? With so many internet supporters, it will be interesting to see how U.S. politicians react to their constituent’s anger.