The fallout of the Megaupload seizure continues to ripple through the whole file-sharing world with both site closures and now abandoned users looking for new places to be able to share files on.
One of those site, Russian based RapidGator, saw their traffic swell from a few hundred to over a hundred thousand visitors a day but unfortunately while most sites would give their eye teeth to have that kind of traffic boost it created a huge problem for RapidGator.
As a result of the jump in traffic PayPal, the company that RapidGator used to process any payments in relation to the site, took notice of the and from the site’s PayPal account.
“PayPal just informed us that our PayPal account is closed due to the high risks of processing file sharing payments,” RapidGator announced. According to the site’s operators this may very well be the end of the file-sharing industry.
PayPal has frozen the cyberlocker’s funds for 6 months and new users can no longer make payments through PayPal. The ban probably means that “affiliates” can’t be paid through PayPal either.
Of course it is PayPal’s prerogative to do this but I think this sets a really bad precedent for the company as it now truly sets them up as a gatekeeper on the web; which in my opinion is not something that they should be doing regardless of whether a site is a file-sharer or not.
This act, on top of the Megaupload seizure is only going to accelerate the closure of these file-sharing sites, many of which are used for legitimate reasons, and may end up having all cloud based services reconsidering using PayPal as their payment option.
In the long run this won’t make that much of a dent in the file-sharing business but it will affect users wanting to use those services and while it might not really affect the bottom line of PayPal’s business it will definitely further tarnish the reputation of the company which is already having many problems in that area.