Alarm is spreading among file-sharing websites in Europe following the shut-down of Megaupload and the arrest of its founder in New Zealand.

FileSonic, the UK-based file storage and sharing site, on Tuesday voluntarily disabled their file sharing functionality.

Efforts to balance the rights of copyright holders against the freedom to exchange information is proving difficult as the US Justice Department and FBI buckle under pressure from powerful voices in the US film and entertainment industry.

Simon McGregor-Wood reports from London.