Megaupload Details Raise Significant Concerns About What DOJ Considers Evidence Of Criminal Behavior
Yesterday I wrote up a first reaction to the Megaupload case. Having spent some more time going through the indictment in much greater detail, I have some more thoughts and concerns.
Context & Ripple Effects
The DOJ's criminal indictment of Megaupload and its operators landed on January 20, 2012, and within a day the case had drawn pickups from Reuters, Fast Company, GigaOM, and Ars Technica — unusual breadth for an indictment still being parsed. Ars Technica's explainer on how the US can seize a 'Hong Kong site' flags the jurisdictional oddity at the center of it, while GigaOM tracked what the takedown did to web traffic patterns.
Techdirt's contribution is a close second read of the indictment itself, arguing that much of what prosecutors present as evidence of criminal behavior looks like ordinary features of a file-hosting service. The concern is not whether charges exist — they do — but whether the theory of criminality would sweep in legitimate cloud-storage conduct along with infringement.
First-order effects
- Megaupload's operators now face a prosecution whose evidentiary foundation, per this reading, rests partly on conduct common to lawful hosting businesses — meaning the defense fight will be over the definition of criminal intent, not just the facts of infringement.
- Megaupload's users lost access to stored files with the domain seizures, a direct cost to non-infringing customers that contemporaneous coverage treated as a measurable disruption to web traffic.
Second-order effects
- Other cyberlocker and cloud-storage providers must reprice their legal risk: if routine hosting features can be recast as conspiracy evidence, every US-reachable file service faces exposure regardless of where its servers sit, as the Hong Kong seizure question makes plain.
- Rights holders gain a new enforcement template — criminal indictment rather than civil suit or DMCA takedown — shifting leverage toward prosecutors and away from the notice-and-takedown framework hosting services had built their practices around.
Third-order effects
- If the DOJ's broad evidentiary standard survives challenge, the effective boundary of secondary copyright liability moves from facilitating infringement to merely operating infrastructure that some users misuse — a line that would need redrawing for the whole cloud-storage sector.
- Cross-border enforcement of this kind tests whether US criminal process can reach foreign-domiciled internet services, a question that will shape where hosting companies incorporate and locate assets.
The trend: US prosecutors are extending copyright enforcement from individual infringers to the platforms themselves, forcing the courts to define where hosting ends and criminal conspiracy begins.