The Impact of Megaupload on Cloud Storage

In the Megaupload case, much more is at stake than the freedom of its founder Kim Dotcom and his colleagues.

The privacy and property rights of more than 60 million users are also at risk, as is the privacy and property rights of anyone who stores data in the cloud, according to the Electronic Frontier Foundation, which represents one of the Megaupload users in a lawsuit against government. This trial may set a very important precedent for all users of cloud services.

The problem is that at the moment there is no clear way for users to get their property, which the federal bailiffs seized when the file-sharing service was closed in January due to suspected copyright infringement. According to the representative of EFF - Julia Samuels, even if the system is put back into operation, it is very likely that the authorities or a third party will first have to check the stored information in order to identify violated copyright, since the transfer of such information is undesirable. Thus, with the increase in users, serious questions arise regarding property rights and privacy. “There should be a mechanism for returning data to users,” says Samuels, “These are important property rights. If we do not reckon with this, we will damage independent parties. These questions are not worked out.

In the Megaupload case, authorities initially told Carpathia, the Megaupload hoster, that it could delete 25 petabytes of seized data after the service was closed, without taking into account the interests of users.

However, immediately after the EFF submitted the documents on behalf of Ohio resident Kyle Goodwin, whose property was seized, the judge was careful not to delete the files and asked the authorities, adviser Kim Dotcom and the EFF for proposals on the possibilities and methods (if any) there) a return of ownership to Megaupload users. Goodwin wants to return college college sports records owned by his OhioSportsNet. According to him, only copies of the records were stored on the site, as the hard disk on which the second copies were damaged.

Samuels believes that this case will be a precedent that other Megaupload users will be able to rely on when they want to return their files, and will also affect future trials.

A previous similar seizure was made last year, when the feds closed and seized domains and bank accounts of foreign online poker sites. When these domains were seized, tens of thousands of gambling enthusiasts lost access to their money until the New York Federal Court considered the players ’appeal for their money back. But, as the difficulties with the Megaupload case show, there is a big difference between refunds and digital files. At the moment, according to the proposals of the federal bailiffs, it becomes almost unrealistic for Megauplod users who have posted legal files to get them back.

In Goodwin’s case, the prosecution argues that “it may take a lot of evidence, including expert opinions, to verify that he’s actually the owner of the video files and does not infringe on other people's copyrights. The materials also recorded the authorities' assertion that the MD5 hashes of his files “coincided with the values ​​of the hashes for pirated versions of popular music”. Thus, there is the possibility of a delay in returning the files until they are verified by the authorities or by a third party appointed by the court. The MPAA said in court that it doesn’t matter how this situation is resolved if the decision includes “measures to prevent the receipt of counterfeit materials”.

“I think these very difficult questions will have to be answered,” says Samuels, “after all, there is reason for doubt.” The hearings on the data return case are not over yet.

Megaupload allowed users to upload large files and share them with other people, but the federals and Hollywood claim that the service was used almost exclusively to distribute files without the permission of the copyright owner, despite the fact that Dotcom denies this.

The prosecution directed against seven persons involved in the Hong Kong file storage Megaupload, including the founder - Dotcom. In January, various charges were brought against them, including copyright infringement and money laundering. Five members of the “gangster organization” called the authorities were arrested in New Zealand. U.S. officials say the site, which has earned hundreds of millions in advertising and user fees, has contributed to copyright infringement on films that were posted before the premiere, in addition to music, television programs, e-books, and business entertainment software. According to them, "estimated damage" to copyright holders "significantly exceeds $ 500 million."