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Here is the post, for those who don't want or can't load the page: PayPal has ceased processing MEGA customer payments effective immediately. MEGA is aware of

by aluhut 12y ago

Here is the post, for those who don't want or can't load the page: PayPal has ceased processing MEGA customer payments effective immediately. MEGA is aware of a report published by NetNames (partially funded from the MPAA supported Digital Citizens Alliance) that incorrectly claims MEGA's business to not be a legitimate cloud storage service. MEGA is aware that Senator Leahy (Vermont, Chair Senate Judiciary Committee) then pressured Visa and MasterCard to cease providing payment services to the companies named in that report. Visa and MasterCard then pressured PayPal to cease providing payment services to MEGA. MEGA provided extensive statistics and other evidence showing that MEGA's business is legitimate and legally compliant. After discussions that appeared to satisfy PayPal’s queries, MEGA authorised PayPal to share that material with Visa and MasterCard. Eventually PayPal made a non-negotiable decision to immediately terminate services to MEGA. PayPal has apologised for this situation and confirmed that MEGA management are upstanding and acting in good faith. PayPal acknowledged that the business is legitimate, but 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”. MEGA has demonstrated that it is as compliant with its legal obligations as USA cloud storage services operated by Google, Microsoft, Apple, Dropbox, Box, Spideroak etc, but PayPal has advised that MEGA's "unique encryption model" presents an insurmountable difficulty. The encryption models claimed by various USA and other 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 to not be part of the USA business network that discriminates against legitimate international businesses. Until new payment systems are implemented, MEGA will temporarily not enforce its storage limits or suspend any accounts for non-payment and has extended existing subscriptions by 2 months free of charge.

UnoriginalGuy 12y ago
For a country which calls itself, non-ironically, the "land of the free" it is quite disappointing how moneyed US politics and the US justice system is. It is pretty apparent in this case that a cartel of US companies has some powerful people in their pockets (namely Senators) and those individuals can wield their power to shut down legitimate businesses running abroad. In this case they will likely wind up shutting down a company, but without even going through any kind of court. Since the last time they spent millions on Megaupload going through courts, and still got nowhere (since their whole case was baseless).
- narrowrail 12y ago
  Is there any citation for the assertion that this action was ordered by a Senator explicitly because of end-to-end encryption? I am skeptical as Mega.nz is obviously not the only company that provides end-to-end encryption.
  - deleted 12y ago
    [deleted]
  - spacemanmatt 12y ago
    I'm suspicious of that assertion only because it ignores the fact that the copyright-maximalist lobby has used the U.S. government to pursue Dotcom abroad in an egregious fashion. Sounds a lot more like convenient piling-on to me.
    - yebyen 12y ago
      I read it to say "we received this report from a senator with a list of company names, and found MEGA, a company that we do substantial business with is on that report." PayPal is perhaps not obligated to "not do business with" the entities listed on that report, perhaps some day, but they chose to not do business with this one and make a big public stink about it (together with MEGA), and whatever the report of that senator actually says (whoever's payroll he's on?), they chose to make their and MEGA' sides of the fight about this one thing, rather than about piracy or cp or whatever one thing ($$) motivated that actual senator's report. I wouldn't say anything as silly as "I trust paypal", but if we can start having this conversation sooner it will be a step in the right direction, IMHO. Encryption is here to stay! Not sure if this is what you mean by convenient piling on.
- Fuxy 12y ago
  American justice is blind to everything except money. Didn't VISA Master Card and Paypal get fined for blocking wikileaks recently? Isn't this just about the same thing?
  - 12y ago
pdabbadabba 12y ago
It's not because of end-to-end encryption. It's in response to allegations that MEGA.nz and other "cyberlockers" exist primarily for the purpose of facilitating copyright infringement. MasterCard and Visa blocked payments in response to this letter from Senator Leahy: http://www.leahy.senate.gov/download/binder1 http://www.leahy.senate.gov/download/binder1 The letter cites this report, which concludes that MEGA.nz, among many other services, exists mostly to facilitate copyright infringement: http://www2.itif.org/2014-netnames-profitability.pdf http://www2.itif.org/2014-netnames-profitability.pdf I doubt that this information is reliable, though I suspect it also happens to be true (if you understand my distinction). I have little doubt that mega.nz is mostly used to store pirated content, but I don't think this report is an adequate justification for a U.S. senator to pressure CC companies to block payments. But I think it is important to emphasize that this is not really about encryption. MEGA.nz would, of course, want us all to think that it is...
- mike_hearn 12y ago
  But I think it is important to emphasize that this is not really about encryption. MEGA.nz would, of course, want us all to think that it is... Well, the part about encryption is in quotes and attributed to PayPal. It seems pretty clear to me - they're saying that due to Dotcom's history and the fact that he can't prove it's NOT piracy, because of the encryption, means they can't touch him. That's a very bad precedent, terrible actually. Your service is encrypted. Someone claims it MUST be used primarily for bad stuff. You cannot prove your innocence because it's encrypted. Therefore, no payment processing for you. It's the definition of guilty until proven innocent. That said, I agree that given Mega's past, it seems likely there's a lot of piracy on there. And I hate piracy. But even so, this sort of thing cannot stand. ISPs make lots of money off piracy too. They shouldn't be cut off from Visa or MasterCard either.
  - pdabbadabba 12y ago
    I think its fairly clear that real story is simply that PayPal didn't want to jeopardize its relationships with Visa and MasterCard, and was only trying to explain in good faith why PayPal and MEGA.nz are in this position. > Visa and MasterCard then pressured PayPal to cease providing payment services to MEGA. As you observed, from a practical perspective it's a real problem for these types of services that they can't do much to rebut accusations of piracy, making it particularly important to behave as a "good corporate citizen" in other ways. And while Visa and MasterCard are free (I would think) to do business, or not, with anyone they choose for any reason, the Chairman of the Senate Judiciary Committee, on the other hand, should be expected to act on more solid information that some industry report before he tries to shut down someone's business. In any event, MEGA.nz is clearly trying to claim they they were targeted because they provide end-to-end encryption. This is false. They were targeted because they are widely viewed as promoting copyright infringement. That they offer end-to-end encryption really plays only a tangential role in these accusations.
gcb0 12y ago
and if we know PayPal, they are still letting the charges go thru, use the money for a couple days and then send the user a in-site only warning about not forwarding it.
drawkbox 12y ago
> Visa and MasterCard then pressured PayPal to cease providing payment services to MEGA. Would love to know more about this. Why did two other companies pressure another company? State assisted anti-competition? Missing out on transaction fees? Why are two of the biggest payment companies pressuring a smaller payment company out of money they decided to step out of? Is the free market we want to build not really a free or fair market, but one where you are free to destroy the free and fair market for other competitors? If one person pressured another person that would be intimidation yet when that person is a larger corporation it is not seen as being a mafioso bully?
- themartorana 12y ago
  Because they were pressured by the government. Who were pressured by a different company. Who pay for elections.

by aluhut 12y ago

UnoriginalGuy 12y ago

For a country which calls itself, non-ironically, the "land of the free" it is quite disappointing how moneyed US politics and the US justice system is. It is pretty apparent in this case that a cartel of US companies has some powerful people in their pockets (namely Senators) and those individuals can wield their power to shut down legitimate businesses running abroad. In this case they will likely wind up shutting down a company, but without even going through any kind of court. Since the last time they spent millions on Megaupload going through courts, and still got nowhere (since their whole case was baseless).

narrowrail 12y ago
Is there any citation for the assertion that this action was ordered by a Senator explicitly because of end-to-end encryption? I am skeptical as Mega.nz is obviously not the only company that provides end-to-end encryption.
- deleted 12y ago
  [deleted]
- spacemanmatt 12y ago
  I'm suspicious of that assertion only because it ignores the fact that the copyright-maximalist lobby has used the U.S. government to pursue Dotcom abroad in an egregious fashion. Sounds a lot more like convenient piling-on to me.
  - yebyen 12y ago
    I read it to say "we received this report from a senator with a list of company names, and found MEGA, a company that we do substantial business with is on that report." PayPal is perhaps not obligated to "not do business with" the entities listed on that report, perhaps some day, but they chose to not do business with this one and make a big public stink about it (together with MEGA), and whatever the report of that senator actually says (whoever's payroll he's on?), they chose to make their and MEGA' sides of the fight about this one thing, rather than about piracy or cp or whatever one thing ($$) motivated that actual senator's report. I wouldn't say anything as silly as "I trust paypal", but if we can start having this conversation sooner it will be a step in the right direction, IMHO. Encryption is here to stay! Not sure if this is what you mean by convenient piling on.
Fuxy 12y ago
American justice is blind to everything except money. Didn't VISA Master Card and Paypal get fined for blocking wikileaks recently? Isn't this just about the same thing?
- 12y ago

pdabbadabba 12y ago

It's not because of end-to-end encryption. It's in response to allegations that MEGA.nz and other "cyberlockers" exist primarily for the purpose of facilitating copyright infringement. MasterCard and Visa blocked payments in response to this letter from Senator Leahy: http://www.leahy.senate.gov/download/binder1 http://www.leahy.senate.gov/download/binder1 The letter cites this report, which concludes that MEGA.nz, among many other services, exists mostly to facilitate copyright infringement: http://www2.itif.org/2014-netnames-profitability.pdf http://www2.itif.org/2014-netnames-profitability.pdf I doubt that this information is reliable, though I suspect it also happens to be true (if you understand my distinction). I have little doubt that mega.nz is mostly used to store pirated content, but I don't think this report is an adequate justification for a U.S. senator to pressure CC companies to block payments. But I think it is important to emphasize that this is not really about encryption. MEGA.nz would, of course, want us all to think that it is...

mike_hearn 12y ago
But I think it is important to emphasize that this is not really about encryption. MEGA.nz would, of course, want us all to think that it is... Well, the part about encryption is in quotes and attributed to PayPal. It seems pretty clear to me - they're saying that due to Dotcom's history and the fact that he can't prove it's NOT piracy, because of the encryption, means they can't touch him. That's a very bad precedent, terrible actually. Your service is encrypted. Someone claims it MUST be used primarily for bad stuff. You cannot prove your innocence because it's encrypted. Therefore, no payment processing for you. It's the definition of guilty until proven innocent. That said, I agree that given Mega's past, it seems likely there's a lot of piracy on there. And I hate piracy. But even so, this sort of thing cannot stand. ISPs make lots of money off piracy too. They shouldn't be cut off from Visa or MasterCard either.
- pdabbadabba 12y ago
  I think its fairly clear that real story is simply that PayPal didn't want to jeopardize its relationships with Visa and MasterCard, and was only trying to explain in good faith why PayPal and MEGA.nz are in this position. > Visa and MasterCard then pressured PayPal to cease providing payment services to MEGA. As you observed, from a practical perspective it's a real problem for these types of services that they can't do much to rebut accusations of piracy, making it particularly important to behave as a "good corporate citizen" in other ways. And while Visa and MasterCard are free (I would think) to do business, or not, with anyone they choose for any reason, the Chairman of the Senate Judiciary Committee, on the other hand, should be expected to act on more solid information that some industry report before he tries to shut down someone's business. In any event, MEGA.nz is clearly trying to claim they they were targeted because they provide end-to-end encryption. This is false. They were targeted because they are widely viewed as promoting copyright infringement. That they offer end-to-end encryption really plays only a tangential role in these accusations.

gcb0 12y ago

and if we know PayPal, they are still letting the charges go thru, use the money for a couple days and then send the user a in-site only warning about not forwarding it.

drawkbox 12y ago

> Visa and MasterCard then pressured PayPal to cease providing payment services to MEGA. Would love to know more about this. Why did two other companies pressure another company? State assisted anti-competition? Missing out on transaction fees? Why are two of the biggest payment companies pressuring a smaller payment company out of money they decided to step out of? Is the free market we want to build not really a free or fair market, but one where you are free to destroy the free and fair market for other competitors? If one person pressured another person that would be intimidation yet when that person is a larger corporation it is not seen as being a mafioso bully?

themartorana 12y ago
Because they were pressured by the government. Who were pressured by a different company. Who pay for elections.