UPDATED: Megaupload, one of the most popular locker sites on the Internet,
has been shut down by federal authorities. Seven people involved with the site have been charged with copyright infringement and conspiracy, says the New York Times. Four of them have been arrested. Whether the timing stemmed from coincidence, a desire to get into the tech world's face or utter tone-deafness, the news came not 24 hours after
a global online protest led a number of legislators
to rethink their positions on the proposed anti-piracy legislation SOPA and PIPA. The hacker group Anonymous
quickly reacted, vowing to shut down the sites of the Justice Department, the Motion Picture Association of America, and the Recording Industry Association of America. Indeed, the sites were disrupted for a time yesterday. Why pick on Megaupload? Explains the Times:
Megaupload, one of the most popular so-called locker services on the Internet, allowed users to anonymously transfer large files like movies and music. Media companies have long accused it of abetting copyright infringement on a vast scale. In a grand jury indictment, Megaupload is accused of causing $500 million in damages to copyright owners and of making $175 million through selling ads and premium subscriptions.
Fellow file locker sites Rapidshare and Mediafire have to be sweating bullets right now waiting for another shoe to drop.
How It Happened
TorrentFreak.com has a
great post on the who, what, why, and where of the takedown and indictments. The real linchpin appears to be a group of incriminating emails. The indictment twice mentions "an undicted co-conspirator," which could mean an employee who was granted immunity to prosecution in exchange for their cooperation. Whether the emails were from an inside source, some sort of electronic wiretap, or a combination of the two, TorrentFreak says they included some pretty salacious and incriminating information:
An email from 2006 claims to show how MegaUpload attempted to download large amounts of content from YouTube and appeared by April that year to have obtained 30% of the site’s content. A follow up email in 2007 claimed that “Kim [MegaUpload's founder] really wants to copy Youtube one to one.” An email from August 2006 titled “lol” contained a screenshot of a MegaUpload download page showing a cracked copy of CD burning software Alcohol 120%. Other correspondence quoted in the indictment appears to show key staff members sending each other links to copyright works hosted on MegaUpload. “We have a funny business . . . modern days pirates,” the exchange begins. “We’re not pirates,” came the reply. “We’re just providing shipping services to pirates.”
To further complicate things for the indictees, it's also being alledged that key staff memebers were knowingly exchanging links to copyrighted movies and TV shows. One email indicates that founder Kim Dotcom (gotta love the hubris of the last name change) sensed that the company was in dangerous territory. Discussing a TorrentFreak article about US seizure operations, he wrote, "This is a serious threat to our business. Please look into this and see how we can protect ourselfs (sic),” adding, “Should we move our domain to another country, Canada or even HK?” The Feds could have a decent case here. However, it's the all or nothing shutdown that's really the issue. As of today, millions of MegaUpload's customers, who were in no way involved in copyright infringment, have no access to the files residing on the company's servers. And that, my friends, is what the anti SOPA/PIPA crowd is all worked up about.
Updated 11:35 to add TorrentFreak report. 
