File storage locker Mega has experienced a major setback. Effective immediately, and at the alleged exhortation of the US government, Paypal has ceased processing payments for the service, despite PayPal's reported confirmation that Mega is a legitimate business. PayPal has since said that the company's "unique encryption model" securing its files presents an insurmountable difficulty to confirm legal compliance.
A report published by NetNames, which is partially funded from the MPAA-supported Digital Citizens Alliance, claimed in September that Mega's business, originally launched by but now divorced from controversial figure Kim Dotcom, is not a "legitimate" cloud storage service, and questioned the legality of other such companies. Senator Leahy (D-Vermont) then allegedly pressured Visa and MasterCard to cease providing payment services to all the companies named in that report. The pair then turned to PayPal to cut off the issue at the source.
Mega provided extensive statistics and other evidence that the company claims proves Mega's legitimacy and compliance with copyright law. After discussions that appeared to satisfy PayPal's queries, Mega authorized PayPal to share that material with Visa and MasterCard. Eventually, however, PayPal made a non-negotiable decision to immediately terminate services to the company.
Mega said that PayPal has apologized for this situation, and "confirmed that Mega management are upstanding and acting in good faith." PayPal advised that a key concern was that Mega has a unique model with its end-to-end encryption which leads to "unknowability of what is on the platform." In a blog post about the payment cessation, Mega claims that the encryption models reported by various US-based entities apparently do not represent any problem to PayPal, or the parties behind PayPal.
"Mega supplies cloud storage services to more than 15 million registered customers in more than 200 countries. Mega will not compromise its end-to-end user-controlled encryption model, and is proud not to be a part of the USA business network, which discriminates against legitimate international businesses," the company reports.
In its report to PayPal, it noted that 99.7 percent of its four billion stored files are smaller than 20MB in size. It was given 9,052 notices of infringing content, and removed around 440,000 files based on these complaints in 2014. The report cited in the shutdown claims that of 500 files randomly selected with public links, 407 of them were copyrighted material that is commercially available.
Top