File-sharing sites feel Megaupload heat, scale back services to avoid similar fate

Days after file-sharing giant Megaupload was eviscerated in an international sting spearheaded by the Justice Department, competing sites are scrambling to stem the flow of copyrighted material and avoid a similar fate. At last count, FileSonic, FileServe, and Uploaded.to had taken notice and turned off the spigot, with more sites sure to follow suit.

Dennis Fisher, editor-in-chief of security blog Threatpost, surmised that the swift dismantling of Megaupload and subsequent domino effect was calculated.

It looks like the chilling effect has already started. Maybe one of the reasons the U.S. government is going after companies alleged to be hosting infringing content is to serve as a deterrent for others engaging in similar activity.

Fisher’s supposition is hardly a stretch. If Washington loves anything more than headline-stealing collars, it’s posturing. But this much is unmistakable: Megaupload’s overnight demolition is creating waves in a black-market community used to drawn-out court battles, with repercussions they can see coming.

So how far will the ripples travel? Will Swiss-based RapidShare, a rival file-sharing hub, bow to the pressure? Clearly their far-off location won’t save them from an agency that had no problem reaching into New Zealand.

And what about file-sharing alternatives BitTorrent and Usenet? Neither depends on the type of central servers that undid Megaupload, but I suspect a little murkiness wouldn’t shield them from a determined Big Brother.

Regardless of the Justice Department’s next move, their first has thrown up one hell of a scarecrow, and file sharers are on alert.