How can the US seize a "Hong Kong site" like Megaupload?

The Megaupload takedown, and the arrest of its key employees, might seem to vindicate late 1990s worries about the Internet and jurisdiction. Does putting a site on the 'Net, though it might be hosted anywhere in the world, subject you simultaneously to the laws of every country on earth? Why would Megaupload, based in Hong Kong, be subject to US copyright laws and to the Digital Millennium Copyright Act?

"Because events on the Net occur everywhere but nowhere in particular," wrote law professors David Johnson and David Post in a 1996 Stanford Law Review article, "no physical jurisdiction has a more compelling claim than any other to subject these events exclusively to its laws." The flip side was that every jurisdiction might make a claim—after all, Internet publishing is "borderless," right?

But there were some principles useful for thinking through questions of jurisdiction. For instance: where did the actual harm occur? As law professor Jack Goldsmith countered in another well-known law review article from the time ("Against Cyberanarchy"), Internet issues aren't unique from traditional international harms. "Both involve people in real space in one territorial jurisdiction transacting with people in real space in another territorial jurisdiction in a way that sometimes causes real-world harms," he wrote. "In both contexts, the state in which the harms are suffered has a legitimate interest in regulating the activity that produces the harms." Surely there must be limits, though. It would be absurd for some resident of Australia to build a perfectly legal site for other Australians but to be arrested and extradited to the US for violating US law. But it's not so absurd once a "nexus" has been established between our mythical Australian and the US.