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back to article Megaupload case near collapse: report

An American district court judge has cast doubt over the whole Megaupload trial, telling the FBI the criminal charges against Kim Dotcom may never make it to trial. The New Zealand Herald is reporting that during a hearing in Virginia the judge, Liam O’Grady, doubted if “we are ever going to have a trial in this matter” when …

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Anonymous Coward

The New Justice[tm]

Music execs! Movie bosses! Can't get what you want? That annoying snot overseas still making your blood boil? No worries, here's your answer: For a special fee, get the FBI to trump up some charges, they'll handle the interpol paperwork and have the locals raid your target, and then see to it that the charges are dropped for some silly reason or another. Your target's business destroyed, no trial to lose, what's not to love? You win, they lose, what's not to love? Special rates on request! Call today!

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Re: The New Justice[tm]

To your list of "Music execs and movie bosses" could you add: small, independent developers just trying to make a living to feed their families by writing games, who'd really appreciate it if some german bloke didn't get rich off making it easy for people to copy for free what we've spent years working on. Ta.

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Anonymous Coward

@Indies

The small independent developers are making millions. I guess those are the ones who went for other business models. Not the ones that are impossible to follow now.

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Re: The New Justice[tm]

"if some german bloke didn't get rich off making it easy for people to copy for free what we've spent years working on"

Dotcom invented the file-copy command...?

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Re: @Indies

Yeah, I pretty much ditched writing games for Windows and went for iPhone instead where the copy protection is much better. I don't think it's a coincidence that the device that makes it hardest to pirate apps is also the one that gets the most attention from developers and ends up getting the best apps written for it, which helps make it the best device to buy.

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Re: @Indies

Last time I looked, the games for Windows were far better than those for the Mac.

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Re: The New Justice[tm]

@Sean

I appreciate that small development companies are likely to be those least able to afford the loss of earnings that software piracy will likely entail, but... you're not really suggesting that going after someone like Kim Dotcom in such a way as to fumble the legal process and thus potentially derail the court case is a good idea, are you? Nobody wins from that.

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Re: The New Justice[tm]

"Trump up charges" ? You can't be so naive that you don't think Megaupload was about piracy, so why even bother to dress up your bias?

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Re: The New Justice[tm]

Thing is, no matter how much the software developers (whose point of view I do appreciate) complain about MegaUpload, it had legitimate uses, like every other file sharer on the net. When MU went dead, so did half the links in the KDE theming/widget system, as the hobbyists who made all that stuff used MU as a reliable, fast method of distributing it. Everything on the net that copies anything can be used for piracy - should we just shut the net down? Allowing attacks like those seen against MegaUpload set a precedent that basically any service can be taken down any time the music/record/software industry says so.

Which is bullshit.

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FAIL

Re: The New Justice[tm]

@h4rm0ny.

Nobody is saying that copyright violation is right or that it didn't go on with Megaupload. Nobody knows how much of the business was built on this (well, maybe Dotcom), but it would apply to any online digital locker. Either you force them all to be private and not allow everyone to see the downloads, or their function cannot exist if you take copyright to be more important than everything else. Reality is, copyright is important, but there are other more important things.

It's a bit like napalming your garden to get rid of some weeds. Yes, it does the job, but you kill a lot of flowers as well and given a short period of time, the weeds will just start spouting again. So, overall, you've done a lot of damage for what?

Even the American military have begun to realise this by using guided missile rather than squadrons of B52s for bombing. Seems like the civilian areas of America are behind the times again.

You can take as many dotcoms out of business as you like, but copyright violation will happen just as much, maybe more. The answer is to adapt your model and make it irrelevant.

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Headmaster

Re: @Indies

Read the post. No one said anything about the Mac. He said iPhone.

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What were you looking at?

iDevices are not Macs.

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Re: @Indies

@Matthew 25.

I know iDevices are not Macs. What he was saying is that the best games go to the most protected platform, citing his move from Windows to iPhone. I countered that by saying in that case, the best games should be on Mac not Windows as Macs are more protected than Windows. However, that is not true, i.e. his argument is false. I wasn't trying to suggest iDevices are Macs or anything, but actually answering the point he made with another example.

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Re: @Indies

Macs have the same copy protection as Windows PCs

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WTF?

Re: Re: The New Justice[tm]

I am a small independent developer who has had an app cracked and released. My ability to make a living to feed my families isn't rooted in a german being blocked from a file sharing website, but rather, in my ability to protect my application from being cracked/released/shared. If you can't feed your family because of a file sharing site, you are doing it wrong and should focus on a more secured way of making money. Plus, I would much rather have the private free-flow of information (even if the information are my bytes) then to have something like CISPA, SOPA, PIPA, or any remarkably unintelligent approach to securing my own inadequacy.

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Go

Re: The New Justice[tm]

You sound like Saul Goodman! http://www.bettercallsaul.com/index.php (is there no way to link here?!)

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Mushroom

Re: The New Justice[tm]

The way to subvert the MPAA/RIAA thuggery is to encourage and support file sharing as much as possible. Take away the financial lifeblood from the parasites. That's what their nightmares are made of and we have the power to bring that about.

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Re: Sean O'Connor 1

You say "the device with the greatest copy protection" but fail to notice games and software deployed over say Java also make millions. How is that so if there is no real copy protection to Java? Oh, perhaps customer loyalty and concentrating on markets that work, instead of those that don't?

I know it's sad to see the software get copied and no money paid for it, but it seems a lost cause right now. Open source and other funding methods seems the only way to beat the pirates at their own game. Especially if you make it legal for your customers to share!

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Mushroom

Re: The New Justice[tm]

I see, so any company producing film and music, or acting on behalf of those doing so, which has employees in sufficient number to need an 'exec', or a 'boss', deserves to have its business destroyed, by thieves?

These are not "trumped-up charges", we are talking about the destruction of hundreds of thousands of jobs, and the destruction of the music and film economies, and with them the destruction of the opportunity for new and old artists alike, to be paid to master their art. All because a lot of angry children - such as yourself - won't tolerate policy measures which apply and strengthen existing and good law, such as protects property.

You write of Megaupload's "business" being destroyed - yet the last time I checked, stealing the fruits of others' labour, and helping others do so, was not a business, but a malenterprise, by any measure whatever.

You write "special rates on request", yet, it is entirely legitimate that individuals' and companies' livelihoods, and their shareholders' interests (who are often pension funds of low-paid workers) are protected by law. Theft is an evil - markets must be protected from petulant, insanely selfish child-minds such as your own.

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Re: The New Justice[tm]

@ Mad Mike

"You can take as many dotcoms out of business as you like, but copyright violation will happen just as much, maybe more. The answer is to adapt your model and make it irrelevant."

Adapt one's model how? Stop making things to sell them? Sell them for as near zero that downloader thieves feel almost no difference paying for them than stealing them? "Go on the road"? Please don't just make that hollow proposition without properly fleshing it out and providing what you think should be the model - as as it stands it is just a figleaf for theft.

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@ Jim 40

"Parasites"? We're not talking about people putting a price on oxygen, or engineering a price-spike in other essentials are we? We're simply talking about people charging reasonable sums for entertainment, to enrich people's lives, and which people only ever partake of completely voluntarily.

And before you tell me you shouldn't have to pay for your CD licences again where the CD corroded, I agree that's a problem and don't have an answer to it, but don't think it legitimises all of the theft which people say it does.

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Anonymous Coward

Re: The New Justice[tm]

Maybe shops should give stuff away. That would stop theft.

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Re: The New Justice[tm]

@ Tapeador

The problem is that the the MPAA/RIAA will not be happy until they have killed the internet as we know it. That's not my theory it's the basis for political parties http://en.wikipedia.org/wiki/Pirate_Party_%28Sweden%29 and is supported not only by many internet observers http://www.guardian.co.uk/technology/2012/apr/20/twenty-fighters-open-internet but also by actions such as the crushing of Megaupload and Wikileaks beforehand.

It can also be seen in the extension of copyright to 70 years after the death of the creator! How is that reasonable, fair or just? I've no objection to content creators being reasonably remunerated but the current system has no sensible rationale that I can detect.

It's like watching the Luddite movement in reverse. In the face of a new technology an old system seeks to retain its power and control. If so called capitalist systems really believed in the tosh they spout they'd leave the market to decide the matter but no, they want to use force just like any other totalitarian regime.

It's really not too dramatic to say that this is a war for who controls the Internet, us or them.

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Devil

Re: The New Justice[tm]

Trying to "protect" your app from being cracked is a fruitless and counter productive exercise...

Whatever protection you introduce will be cracked sooner or later, and most people who would pirate you app aren't going to magically buy it because, they're just going to wait for the crack.

On the other hand, the more "protection" you implement, the more inconvenience you foist upon paying customers... I've seen many buggy drm and license enforcement schemes cause chaos for paying customers, and even if not struck by bugs such schemes are often an unwanted administrative overhead.

Meanwhile the pirates are running a cracked version which has all this removed, and so have problem-free use of the app.

Also worth considering, is that while pirates may not have paid you directly, they are providing free marketing if nothing else. Wasn't it bill gates who said that if people are going to pirate, he'd much prefer they pirate his stuff than a competitor?

Piracy is an unavoidable issue when selling an infinitely reproducible good, all you can do is make your app compelling and widely known so that those who are willing to pay will do so. Those who aren't, won't, but they might have friends who will so better for them to see your apps than someone else's.

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WTF?

Re: The New Justice[tm]

Sell cheap, make it up on volume... If you sell cheap enough and make it convenient, piracy won't be worth the extra hassle and most people won't bother. As it stands now, piracy not only offers price savings but its also far more convenient and often provides a better (eg free of artificial restrictions) product. When your product has marginal reproduction costs, a cheap price is still profitable and a lower price will increase sales.

For music, go on tour... Actually work for your money, and treat recorded copies of music as promotional material designed to encourage people to buy tickets for your live events. Encourage sharing because the more your music is shared, the more famous you become and the more people will attend your live shows.

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Re: The New Justice[tm]

Make Easy? - MegaUpload didn't make anything. Rapidshare had already been there for half a decade when Dotcom launched his service. The difference being in the details and the pricing. Before that there was (and stil is) bittorrent, and before that various applications in the P2P world, and before that was Napster, the first really huge sharing system. And of course before that for decades was the private ftp server network, which is still used by "The Scene" today.

Now, computer games was always a target for hacking. I personally had countless hundreds of floppys with hacked C64 games in my youth. I also had hundreds of cassette tapes with music recorded from the radio or from records owned by my friends. No, sharing copyrighted stuff is not new and was certainly not neither invented nor made more rampant by Dotcom and MegaUpload. It was just a new twist on a many decades old gambit.

Now, instead of trying to intimidate people into not doing what they've always been doing (a futile effort at best), they need to figure out how to live with it. First of all they need to understand WHY people download illegally. Unfortunately while the reasons are well-documented by countless studies, the copyright holders completely ignore this and apparently assume that people do it exclusively because they're evil and because they are freeloaders.

The studies reveal that only about 10% are freeloaders, i.e. people never willing to pay no matter what the price. Another 10% are people willing to pay a reasonable price but find the current prices too high. The rest are actually people willing to pay the full asking price if they were able to do so, but geo-discrimination and format blackouts prevents them. This is the big one and strangely enough it's also the one most easy to change. Yes, the copyright holders could cut piracy with 80% quite easily by simply changing their policy.

Want examples? - A new movie opens in the US (and Canada) but not in Europe for weeks/months. People in Europe have the choice of waiting or piracy. And a US consumer that rather want to watch the movie at home? - Nope, go to a cinema or wait - or grab it from the pirates. The solution is simple: Simply release the movies and the music globally on all formats simultaneously and everybody is able to enjoy it the way he or she prefers and to do it with a clean conscience as they've paid for the privilege.

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WTF?

the games for Windows were far better than those for the Mac

iOS != Mac

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Kimble...

...and Kimble manages to not only skate scot free but look like a damn hero while doing it. My hat is off to you...that's one hell of a coup.

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Anonymous Coward

"Scot free"?

If having your companies dismantled by a foreign power without legal grounds counts as such, I suppose.

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Re: "Scot free"?

I can see the case for compensation right now. Whatever the merits or not of Dotcom as a person, his business has been destroyed by a combination of the NZ and USA authorities. Now, it looks like they won't be getting him for anything. Even if they go after him on copyright charges in NZ, that'll be dubious as it looks like a personal vendetta rather than proper police work and justice.

So, who'll end up paying the bill? I find it unlikely he'll allow them to destroy his business and not pay compensation and they seem to have so royally screwed up that liability can be assured.

Wonder what the final bill will be.

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Anonymous Coward

Re: "Scot free"?

Certainly "Scot free" - no Scots were involved in this case.

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Re: "Scot free"?

This is Kimble. Look at his history. It's hardly the first time his million dollar "ventures" have been dismantled and yet he keeps coming back. He WILL be back, and he will be a millionaire again. He's already become the "messiah" of downloading freedom thanks to this case...he's a huge opportunist (ie YIHAT) and anything that makes him look like Robin Hood is going to help him rebuild his millions. Not only did the feds lose, they basically handed him his comeback.

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FAIL

Re: Wonder what the final bill will be.

A better question would be:

"WHO will be paying that bill"?

I seriously doubt it will be members of the MAFIAA; and more likely US taxpayers.

After all, we here in the good ole USA have "The Best Government (the MAFIAA members) Can Buy!".

This botched FBI operation just proves it.

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Anonymous Coward

Can that prosecutor please explain...

... how the company being out of jurisdiction is a non-issue because the FBI's target is, er, a German citizen in New Zealand, ie possibly even more out of US jurisdiction?

Whatever the guy's antecedents, I find it... curious how the US public puts up with a "justice" system at least as crooked as the people they're going after. Whatever their motivation, it's not about having the moral high ground. And it's not about a fair fight either.

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Re: Can that prosecutor please explain...

No because they love that their government acts like world police when no crime has been committed, as long as it doesn't turn on them.

It is absolutely bizarre and the only way they'll learn is through having to pay out massive amounts in damages - except they won't because it's not their money they're throwing away.

Bankers anybody?

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Devil

Re: Can that prosecutor please explain...

"No because they love that their government acts like world police"

Umm, no actually we don't. We actually would prefer that our gubbermint stop acting like the tyrannical teething baby it too often is. Please don't confuse the vast majority of us with the megalomaniacal fucks who buy and sell candidates to both parties in the Republocrap Democant cartel. Oh joy we get another election, big deal, maybe folks will get tired of politics as usual and vote for their choice of mayo or mustard but regardless of which they pick it's going on the same shit sandwich and we'll have to eat it for another four years when maybe we'll get the honor of being able to choose ketchup.

And FFS if all you've got to say is just the verbal equivalent to the skid marks in your pants there streaky, the least you could do is choose the icon more carefully. It's pretty clear you wanted the one just to the left of what you clicked.

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FAIL

Re: Can that prosecutor please explain...NO PROBLEM

The US has delusions of grandeur, they think just because they have 19,000 drones around and can kill anyone, anywhere including US citizens - that their law overrides all others.

Holder, (Obama's attorney-general), and Biden (V-P & hatchet man for the movie industry) might have to face the fact they screwed up.

What's more, the US Constitution prohibits retroactive laws!

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Re: Can that prosecutor please explain . . .

"they think just because they have 19,000 drones around and can kill anyone, anywhere including US citizens "

A bit harsh for downloading crap movies, donchyathink?

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Mushroom

Re: A bit harsh for downloading crap movies, donchyathink?

Well, they already bought those drones and Osama is dead, so they gotta use them on someone. After all, they have to justify buying new ones soon, otherwise poor Lockheed Martin or Boeing might not turn record profits.

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WTF?

Re: Can that prosecutor please explain . . .

I don't know about punishment for downloading movies, but death-by-drone seems to be the punishment in Pakistan for using a camera:

http://reprieve.org.uk/investigations/drones/

http://www.guardian.co.uk/commentisfree/cifamerica/2011/nov/07/cia-unaccountable-drone-war

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Unhappy

Re: Can that prosecutor please explain...

... how the company being out of jurisdiction is a non-issue because the FBI's target is, er, a German citizen in New Zealand, ie possibly even more out of US jurisdiction?

Because some factions of the Amerikan reich believe that that are the world power and that every other country and business in the world is subservient to them.

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Black Helicopters

Re: Can that prosecutor please explain...

"...they love that their government acts like world police..."

We don't. We detest it.

Here in the 'land of the free' the actual news is: Hollywood! Gosh we love our stories! We can't get enough of people behaving badly...and we also have lost the ability to detect the difference between truth and lip service (lies, for short). A LARGE percentage of the population drop out of high school - and why shouldn't they: the people's educational system is bloated with administrators, basically warehousing young people away from the 'adults', cheats the teachers out of a fair living wage as less important than acquiring real estate and "juice" in the halls of power, yet is highly successful as a political concept: save our schools save the children etc.

One must search for a while, if one is so inclined, for any higher level of discourse, for access to world media and viewpoints other than the addlepated jingoism provided at every turn - Google News features the lamest US publications and seems filtered. So whatever you might think the American people are for or against, first check if they KNOW about it. I am not being facetious!

Also - the rhetoric and fantasy that the US so much more advanced than other countries - this is trumpeted over and over without specifying in what area or discipline - it cannot be true for everything. And isn't, at all, consistently true for many things. I keep wondering why, the Cowboy of the World having shot itself in the foot so many times, it is still trying to lurch along on its old myths.

I passionately love my country. So do so many of us, who understand that what happens to me, happens to you... the web analogy. When force-fed lies day after day, it is not surprising that people have lost the taste of truth. Thankfully there are some people willing to go through the leavings to find it.

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Anonymous Coward

Re: A bit harsh for downloading crap movies, donchyathink?

I'd say you're right, but I think the underlying reason is slightly subtler.

If you compare the bulk of the Lockheed Martin/Boeing manufacturing base against the voting stronghold (or sometimes, simply residency) of the presidents that START wars, you'll find a pretty strong correlation: The ex-confederate states of the American South.

Yes, it's about money, but only to the extent that money can be converted to power.

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Anonymous Coward

Re: Can that prosecutor please explain...

@Eddy Ito

"Umm, no actually we don't. We actually would prefer that our gubbermint stop acting like the tyrannical teething baby it too often is."

So why do you collectively keep voting for such politicians then? The US is a democracy, so the government reflects the true choice of the population. Same in Greece where the population is wishing now that they'd had better governments for the past few decades.

Democracy will not result in effective government unless a majority of the population takes a dispassionate reasoned view of the value to the greater good of the candidates on offer. Just voting for the guy who looks good and pulls on the emotional/religious heart strings won't work in the long run. The only country I know off that does it properly is Australia where voting is compulsory but the voters are given the official option of 'none of the above'. The UK sort of solves the problem by having an apolitical civil service which generally discourages freshly elected politicians from doing things are just too crazy. That doesn't explain Germany where AFAIK their civil servants are employed by the winning party, not the state. Given that Germans as a whole take important matters seriously it is not surprising that it seems to work quite well for them.

One simple thing the US could do to stop itself appearing to be the world's worst cop is to stop paying its prosecutors bonuses based on results.

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Anonymous Coward

Re: Can that prosecutor please explain...

Damned touch screen keyboards - can't type for toffee on one. Apologies for the typos.

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@AC 05:25

"So why do you collectively keep voting for such politicians then?"

That's the whole mayo vs mustard thing. The majority of political news coverage is about a few selected talking points that really differentiates one candidate from the next. Candidates that really are different from the rest are typically labeled kooks because they aren't savvy enough to keep their mouth shut on subjects that give the media laugh tracks instead of sound bites. This ensures that regardless of which candidates remain at the end the basic authoritarian core remains intact.

Add to that the fact that the primaries are mainly attended by only the extreme members of either party and the authoritarian model is a lock. Notice there is about 50% of voters who typically stay out of primaries because they look at the field and shudder at the usually horrid selection but more importantly there is a re-run of Married with Children on that night which takes precedence.

That said, yes it's very true that we need to strip economic incentives from our law enforcement and judicial governmental departments.

Coincidentally I came across this Businessweek article by Paul Barrett on Richard Feldman and I couldn't help but think Mr. Feldman is only scratching lightly on the corroded surface of justice in the U.S.

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Pint

Worst intentions?

I'm beginning to wonder if reaching a court hearing was the original intention of this case - or if, in fact, it's to leave Kim Dotcom et al dangling in legal limbo & controversy long enough to wreck the Megaupload business entity & "send a message" to similar online services. The US Gov. & the FBI give the appearance of being bothered less & less about international law & protocol these days, and the scent of corporate collusion is not unnoticeable. And if it comes back to bite them, I'm pretty certain it will be expertly handled by their spinmeisters. Regardless of Megaupload's legal bearing in this case, there are ways to mount & pursue a lawful challenge. For me at least, the way this was done looks more like simple bully boy standover tactics.

Just my 2 bob's worth.

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Mushroom

How disgusting... from what I've been reading it's like they want this case dismissed... funny and sad thing is even if it is, Megaupload is cooked, the company is dead, and from what others have said they can't even sue the U.S government to recoup their loses because it's "immune" to lawsuits...

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RE: they can't even sue the U.S government to recoup their loses

Imagine the individual MAFIAA members facing the possibility of having to pay damages?

That is WHY (sovereign Immunity) the MAFIAA bosses got the FBI to 'do the dirty work'.

They win, taxpayers and legitimate Mega Upload customers LOSE!

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Anonymous Coward

Re: Worst intentions?

Or you might also theorize that the US government's legal team screams of incompetence?

Right, with the financial crisis lingering for the past 3 years, there are legions of talented lawyers looking for a job and yet those responsible for the Megaupload indictment showed nothing worthy of their title.

After all consideration, I agree with Spud2go that it merely comes down to a case of legal bullying (and sheer arrogance) from the US government towards a company it has no jurisdiction on.

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