I disagree. Distributing copyrighted material to unauthorized parties is an issue. Storing it doesn't seem like an issue to me. 100% of cloud storage companies are grossly violating all sorts of copyrights if this is the case. Storing it but removing the ability for the internet at large to leech it seems legit to me. If someone distributes the private URL to such files, I think that counts as them distributing it, not megaupload.

It's not a straightforward issue though.

Don't say it then.

Good point my statement could be taken out of context. Would not have brought it up if it had not been heavily implied by AlexMuir and others, you can read my critical response to such: http://news.ycombinator.com/item?id=3486750