JUDY WOODRUFF: Now, one of the world's most popular websites is shut down by the U.S. government in the battle over online piracy.
Margaret Warner has the story.
MARGARET WARNER: It's one of the largest criminal copyright cases ever brought. The target is a website based in Hong Kong that's been used to share large files, including movies, videos, television shows, e-books, games, and music.
It's called Megaupload, and the heavily visited site is said to have 150 million registered users and 50 million visits a day. Now it stands charged with storing and distributing pirated material, and thus robbing copyright holders of more than $500,000.
Yesterday, the Justice Department shut it down and released indictments against seven executives. Four were arrested at the New Zealand mansion of its founder, who goes by the name Kim Dotcom.
Within hours, the hacker collective called Anonymous retaliated, shutting down the websites of the Justice Department and major media groups, including Universal Music and the Motion Picture Association of America. The government's crackdown came one day after this week's online protests against anti-piracy bills in Congress.
For more on all of this, we turn to Cecilia Kang, who's covering it for The Washington Post.
And, Cecilia, welcome back to the program.
It sounds as if this website had just everything you can imagine in print, video or audio. How did it actually function for its users?
CECILIA KANG, The Washington Post: It did have all of those bits of content.
The way that it functions is that users go to the website, and they can upload content. It could be anything from their family videos or music that they have on these files, or, in the case of this FBI criminal indictment, copyrighted material that was uploaded illegally.
And what they do is, you upload all of those files onto the site, and from that site, other users can access those files. And they get -- that's how you distribute the content.
MARGARET WARNER: So, are you saying that when the pirated material gets there -- or copyrighted material, I should say, it's not by the legitimate copyright holders; it's already been essentially stolen or pirated even before it's uploaded?
CECILIA KANG: That's what the FBI criminal indictment alleges, is that much of the website's material was illegally there. It was copyrighted material that wasn't given permission to be there by the copyright holders.
And beyond that, the FBI's saying that there was a big conspiracy actually for the website operators to get as much illegal content on the website as possible.
MARGARET WARNER: Now, what's the company's defense here? I know you have spoken to at least one of the lawyers for this company.
CECILIA KANG: I have.
I spoke to the outside litigator for this case. And Ira Rothkin, the counsel for Megaupload, said that, number one, there wasn't due process. He said that they were not informed that there was going to be any sort of a criminal case brought against them, and they didn't have a chance to defend themselves.
But they point to actually some historical court cases that show that perhaps Megaupload has a defense, in that they weren't contacted properly by copyright holders that they should take down content, and, if they were, they would have. And they also said that they may be protected by other cases, such as the case of YouTube, where -- and in Sony's case, where they defended themselves against Betamax that if other uses that are legitimate for the website are being done, then actually the website shouldn't be liable when there is illegal activity as well.
MARGARET WARNER: Now, tell us who this company is. I noticed from the -- at least from the Justice Department indictment, not one of the people arrested was even an American.
CECILIA KANG: It's a really interesting company.
It's a very opaque company, in that it's very difficult to see exactly how it runs. It's not like there's an org chart on the website, in the way that a company -- a Fortune 500 company would have.
It's an international company based in Hong Kong. And many of its executives are dispersed around the world. As you mentioned, four of the people who were indicted and arrested are based in New Zealand, for example.
It has a figurehead as a chief executive, not officially the chief executive according to the company's attorney. But his name is Beatz. And he's actually a pretty big figure in the hip-hop world, the R&B world, married to Alicia Keys.
MARGARET WARNER: Yes. And we should point out that he was not actually arrested or indicted.
CECILIA KANG: That's right. That's right.
MARGARET WARNER: Explain why some prominent celebrities have actually endorsed this company and have done promotional videos.
CECILIA KANG: It's an interesting twist in this.
Megaupload has had a lot of criticism fired at it by record labels for a while. Universal Music actually has been very critical of the site for the very reasons the FBI brought this criminal indictment against them, saying that there's a lot of illegal copy on the website.
And so what Megaupload did is, it got a lot of people, some pretty big names, big celebrities to create a music video. And that music video included Kanye West, Will.i.am, a member of the Black Eyed Peas, and other members, like Jamie Smith, to -- other celebrities -- to endorse the website really in a Webcasted video, saying that Megaupload is a great product essentially and come use it.
MARGARET WARNER: What do you make of the timing, that this comes the very same week that you have had this huge debate, controversy about the anti-piracy legislation in Congress, you have this online protest by Wikipedia and others?
CECILIA KANG: It's been a very high-volume, very highly emotional debate right now on piracy and the Internet in Washington.
And the timing is pretty interesting. And there's a lot of people who are bringing up questions as to why the Justice Department, if they were investigating this for more than a couple years, it appears, why are they bringing out their indictment right now, especially when it looks like two bills were really under siege by the Internet community?
So there's a lot of -- there's a lot of suspicion around the timing of this. But these are two -- one should keep in mind that these are two discreet issues. There's the federal indictment of a criminal case, and then there are the two bills right now that are being proposed on the Hill that I should say actually have been on hold, today were put on hold because of all the controversy around them.
But, if anything, it just makes the debate much more at the front and center in Washington. And it makes -- it's brought on -- it's made the debate less about what's in the Beltway, and it's brought in the whole Internet community, people who -- anybody who uses the Internet, people who run websites, the music community, Hollywood. It's become a much bigger debate.
MARGARET WARNER: Well, Cecilia Kang of The Washington Post, thank you so much.
CECILIA KANG: Thank you, Margaret.