Federal indictment claims popular Web site Megaupload.com shared pirated material

Federal authorities shut down one of the Web’s most popular sites Thursday on charges that it illegally shared movies, television shows and e-books, prompting hackers to retaliate by blocking access to several Web sites, including those of the Justice Department and Universal Music.

The shutdown of Megaupload was part of a federal indictment accusing the company of running an international criminal organization that allowed consumers to easily watch or share pirated content. The site’s offerings were a virtual bazaar of what the Internet has to offer, including pornography and illegally copied video games, federal officials said. In some cases, people could see movies before they were released in theaters.

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Who’s involved and what are the stakes?: A look at the politicians, companies and lobbying groups involved in the dispute over the Stop Online Piracy Act.

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A U.S. online piracy case brought the shutdown of Megaupload.com, one of the world's biggest file sharing sites, along with 4 arrests in New Zealand. It comes just after a massive internet protest over new U.S. anti-piracy laws. (Jan. 20)

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Investigators say Megaupload’s executives made more than $175 million through subscription fees and online ads while robbing authors, movie producers, musicians and other copyright holders of more than $500 million.

“This action is among the largest criminal copyright cases ever brought by the United States,” the Justice Department and FBI said in a statement.

Seven executives, including Megaupload’s founder, were indicted. But Swizz Beatz, who is listed on some sites as the company’s chief executive, was not charged. Beatz, a musician, is married to singer Alicia Keys. Although the music and movie industries are among those most harmed by piracy, numerous celebrities have endorsed the Megaupload site, including Kanye West, Kim Kardashian, and rappers P. Diddy and Will.i.am.

Megaupload was estimated at one point to be the 13th most frequently visited site on the Internet, according to the indictment. The site claims to have about 50 million daily visits.

Justice Department officials said Thursday that the timing of its indictment had nothing to do with a debate this week on Capitol Hill over legislation that takes aim at online piracy.

Nevertheless, the federal action angered hackers, escalating a growing battle between Washington and the Web’s power brokers, both legitimate and illicit.

Internet companies say the proposed legislation would give too much power to law enforcement to shut down Web sites, and some cited the Justice Department’s actions on Thursday as evidence.

This week, Wikipedia, Google and other major Web sites displayed their influence when they blacked out their sites or encouraged users to protest the bills. Their efforts, which persuaded some lawmakers to drop their support of the measures, overcame a traditional lobbying effort by Hollywood and other media companies.

On Thursday, hours after federal officials unsealed their indictment, a loosely affiliated group of hackers known as Anonymous said it had shut down the Justice Department’s site and was taking aim at lawmakers and agencies in Washington as well as media companies that had supported the ­anti-piracy legislation.

Through Twitter and other affiliations, Anonymous vowed to go after the Web sites of the White House, FBI, the U.S. Copyright Office and the Motion Picture Association of America, among others.