The Federal Bureau of Investigation shut down one of the world's most popular file-sharing websites as a debate rages in Washington over whether to give the government new powers to crack down on Internet pirates.

Authorities claim Megaupload Ltd., based in Hong Kong, and its collection of websites generated more than $175 million in criminal proceeds and caused more than half a billion dollars in harm to copyright owners. Police on Thursday arrested four employees of the company in Auckland, New Zealand, charging them with...