Why small businesses should care about the Megaupload debacle

Why small businesses should care about the Megaupload debacle

Summary: The site's uncertain fate serves as a reminder that SMBs should carefully consider the viability of cloud storage and backup services they use -- or they could lose important company data.

TOPICS: Cloud, Storage, SMBs

Anyone who has a passing interest in technology issues probably has been reading about Megaupload, the file-sharing company that was targeted by the U.S. Justice Department and shut down amid accusations of data piracy. As of this writing, four of the executives behind the site have been arrested on charges ranging from racketeering to criminal copyright infringement.

It would be easy to read this story with just a passing interest in the intrigue of the matter, but there are two reasons that small businesses should follow this carefully.

  1. Legitimate users of the Megaupload site (there were an estimated 50 million people uploading to the site) stand to lose their data in the debacle. That's because right now, access is frozen. So, if you were a company or individual uploading personal documents or photos to which you legitimately owned the copyright, you are being shut out while the litigation proceeds. If you didn't have a backup, you might be seriously out of lock.
  2. Even the hosting companies might not have access if a cloud storage or service company goes belly-up. That's because of security and management processes that were put in place between the site owners and the hosting companies. This makes me recall the time my friend was running a small e-commerce site. When the hosting site went under, he lost all access to the files until he could negotiate a rather arduous process to get them back. It was a different situation, with a similar result.

For me, the Megaupload mess is a reminder that SMBs -- indeed companies of any size -- need to do a much better job of reviewing the terms of cloud services that they are using. Seriously, have you stopped to consider what would happen if Dropbox dropped off the face of the earth tomorrow? Have you bothered to ask what would happen to your files?

Small businesses need start asking questions that help them understand the data backup plan behind their chosen cloud providers: how often is the data replicated and secured? They also need to understand the recovery strategy: how quickly will you get data back is a server goes south? Not to mention, they need to understand what would happen legally if the provider simply ran out of money or ran into legal problems akin to Megaupload.

Is your small business asking the right questions?

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Topics: Cloud, Storage, SMBs

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  • Maybe I am missing something here.....

    I've heard the media talk about risk and the cloud and more than once I've heard the Dropbox comment. If Dropbox got hit by a bus, it really wouldn't impact me. It's a sync service so I always have a copy of my docs on my PC ( multiple PC's actually ) as well as on the Dropbox service. I'm not a Mega upload customer, but it just comes across as a public FTP server.

    So my question is: How does one lose content? Are they uploading and deleting locally? Why delete locally? Sure it impacts your ability to share, but there are lots of services out there. Apart from being a PITA to switch, I don't see how it greatly impacts a business.
  • The Megaupload debacle is a threat to the entire internet

    With no regards to legitimate, legal uses of the service the US government shut down a major web based business. All of the customers of this business have had their property confiscated and will probably see their property destroyed.

    If Megaupload was a bank, and knew some of it's depositors were money launderers, would the entire bank be shut down and EVERY depositor's funds confiscated and destroyed?

    If Megaupload was an apartment complex, and knew some of it's tenants were running illegal poker games, would the entire apartment building be shut down and EVERY tenant's furniture and other personal property be confiscated and destroyed?

    I am very afraid for the future of the internet. Trying to minimize collateral damage when prosecuting criminal activity seems to not be a goal of US law enforcement.
    • RE: Why small businesses should care about the Megaupload debacle


      Excellent points! Not only that but it seems the US DOJ has worldwide reach so international sovereignty means nothing to them. Frightening.
      • Sigh. New Zealand law enforcement did the actual arrests at

        the request of U.S. law enforcement.
      • RE: Why small businesses should care about the Megaupload debacle

        And the difference is?

        The US ordered New Zealand to arrest those people.
        New Zealand arrested them.

        If you don't live in China, Iran or Russia (AND you aren't paying high enough kickbacks to the appropriate officials) the US can have you arrested.
    • You're comparing Apple to Oranges

      This is not a bank, and business at Megaupload is different then at a Bank, so your anaolgy isn't the same. Neither is an apartment complex the same as this.

      But then again, they didn't say all the files would be deleted, they said that the assets where frozen right now.

      What choice do they have? Let all the offenders delete all the evidence?
      William Farrel
      • OK, How about the analogy of a self-storage facility?

        @William Farrel
        OK, How about the analogy of a self-storage facility?<br><br>If the owners of the self-storage facility knew some of it's renters were storing stolen items in their storage lockers, would the entire site be shut down and EVERY renters items confiscated and destroyed?
  • The number of legitimate people using megaupload could probably be

    counted on one hand. Also, if you upload to a site you know is engaging in rampant piracy, you deserve what you get.
    • Agreed

      If one knows his bank belong to Mafia, don't blame police for its asset frozen.
  • RE: Why small businesses should care about the Megaupload debacle

    Risk management... Whatever you rely upon, you always need a plan B, and if it is critical - also a plan C.
  • RE: Why small businesses should care about the Megaupload debacle

    Disaster Recovery Plans. All companies should implement one.
  • RE: Why small businesses should care about the Megaupload debacle

    So won't a cloud be like that. If someone hijacks it or steals it?
    Then you would be S___ out of Luck.
  • Regarding Dropbox

    I use Dropbox constantly, for file sharing with others and for synching among my devices. (I don't use it for backup.)
    You can upload your files to Dropbox, which leaves the original on your computer. Or you can just slide your file onto the Dropbox icon or folder on your desktop, in which case the file is moved from one place to another and no longer exists in the original location. Much easier to do it that way, but dangerous.
    Mike Van Horn
  • Can't see LC's quote in this article.

    <a href="http://www.corp-infotech.com/2012/02/megaupload-why-small-business-should-care/" target="_blank" rel="nofollow">http://www.corp-infotech.com/2012/02/megaupload-why-small-business-should-care/</a>
  • RE: Why small businesses should care about the Megaupload debacle

    All of this was done without a SOPA law, good ol government thinking what is best for us(or in need of special interest groups aka MPAA/RIAA)