FBI's Megaupload bust, Anonymous' hacks underscore SOPA battle

A day after thousands of websites staged an effective protest against anti-piracy legislation pending before Congress, a real-world clash underscored the motivation behind the proposed laws — and illustrated how gray the issue of piracy can sometimes be.

The hacker group Anonymous, in what it called its largest operation to date, attacked the websites of the Justice Department, the FBI, the White House and several entertainment industry companies Jan. 19, after the FBI had indicted principals of the popular file-sharing site Megaupload and shut down the site earlier in the day.

Anonymous also said its attacks were in opposition to the Stop Online Piracy Act in the House and the Protect Intellectual Property Act in the Senate, which appear to have been derailed after Wednesday’s website blackout and online petition protests.

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The bills ostensibly target pirate operations, particularly those based overseas, that peddle counterfeit music, movies and other goods that take revenue away from their creators and in the process threaten domestic jobs. But opponents claim their broad provisions also threatened any website that uses shared or user-generated content, such as Wikipedia, and that their requirements for Internet service providers and search engines to block such sites or redirect traffic away from them undercut efforts to secure the Internet’s Domain Name System.
 
The indictments Thursday seemed to match the purpose behind the legislation: DOJ charged seven foreign citizens essentially with stealing millions of dollars from recording artists via Megaupload, which is based in Hong Kong. It has been sued once for copyright infringement and has been denounced for piracy by groups such as the Recording Industry Association of America and Creative America, Billboard reported.

Yet Megaupload nevertheless appears to have had the support of some of the recording industry’s most prominent artists.

The operation’s chief executive — who was not among those charged — is record producer and rapper Kasseem “Swizz Beatz” Dean, who is married to singer Alicia Keys and includes a number of major recording artists among his friends, the Washington Post reported.

In fact, Universal Music and Megaupload have been embroiled in a legal wrangle over a promotional video on YouTube with recording artists Diddy, Will.i.am, Kanye West, Snoop Dogg, Chris Brown, The Game, Mary J. Blige and Keys — some of whom are Universal artists  — all singing about how they enjoy using Megaupload.

And it has gotten a lot of business: Megaupload.com has claimed to have more than 1 billion visits, more than 150 million registered users and 50 million visitors a day. The site accounted for 4 percent of the total traffic on the Internet, according to the promotional video.

DOJ said Megaupload had made $175 million in illegal proceeds over about five years and caused a half-billion dollars in harm to copyright owners.

A 72-page indictment handed down by a grand jury in Virginia, charged Megaupload founder Kim Dotcom and the six others, who are citizens of Germany, Estonia, Slovakia or the Netherlands, with racketeering conspiracy, conspiring to commit copyright infringement and money laundering, and two counts of criminal copyright infringement. Dotcom was among the three arrested in New Zealand; the FBI said Dotcom is a resident of that country and Hong Kong.

The indictment also charges two corporations founded by Dotcom, Megaupload Ltd. and Vestor Ltd. DOJ said law enforcement agents executed more than 20 search warrants in the United States and eight other countries, seizing about $50 million in assets, including bank accounts and about 20 expensive cars. It also targeted sites where Megaupload has servers — including Ashburn, Va.; Washington, D.C.; the Netherlands and Canada — and seized 18 domain names.

Within hours of the arrests, Anonymous began its distributed denial-of-service attacks against the government and media sites. One member’s announcement on Twitter said, “The Largest Attack Ever by Anonymous — 5,635 People Confirmed Using #LOIC to Bring Down Sites!” LOIC stands for Low Orbit Ion Canon, an open-source tool for network stress-testing and DDOS attacks.

The DOJ and FBI sites were hit, but both were back up late Thursday night. Among other sites targeted, Universal Music's was still unavailable Friday morning, displaying the message: “The Site is under maintenance. Please expect it to be back shortly.”

The websites of the Recording Industry Association of America and the Motion Picture Association of America were among the others temporarily shut down.

Meanwhile, Megaupload apparently returned to the Web, operating under a numerical IP address without a domain name, and as of noon Friday, had 68,000 “likes” on Facbook, the Consumerist reported.