Bloomberg News

Dotcom Raid Anniversary Marked by New File-Sharing Site

January 21, 2013

Kim Dotcom, marking one year since his Megaupload.com website was shut down by the U.S. Department of Justice and his home raided by New Zealand tactical squad officers in helicopters, unveiled a successor file-storage and sharing site, saying innovation won’t be stopped.

The Mega website began accepting registrations from the public at 6:48 a.m. Auckland time, coinciding with the time the first helicopter touched down at Dotcom’s NZ$30 million ($25 million) mansion in an Auckland suburb. The site had more than a million visitors and 500,000 people registered in the first 14 hours, Dotcom told more 200 guests, including journalists, he had invited to the official start of the website at his home yesterday.

“I’ve never seen anything like this,” he said from a stage set up outside his home. “Sometimes good things come out of terrible events.”

Mega, like its predecessor, will let users upload, download and share files, competing with sites such as Dropbox.com and even Google Inc.’s Youtube.com, Dotcom said. Unlike those sites, Mega will allow file encryption through an Internet browser with the user having the only key to unlock the file, preventing governments and storage providers from viewing the contents, he said.

Breaking Impossible

Breaking into a file at Mega is “impossible,” Dotcom said in a Bloomberg Television interview last week before the start of the website. According to DigiCert Inc., the Lindon, Utah- based provider of Internet Security Certificates, cracking a 2048-bit RSA SSL code using a standard desktop computer would take 500,000 times longer than the age of the universe, which is about 13 billion years old.

The random generation of the encryption code, which includes typewriter strokes and movements of the mouse on an individual’s computer, may actually be predictable, according to the website Gizmodo.

“The code actually leaves Mega open to decide whether or not they feel like enforcing encryption for any given user,” according to Gizmodo. “Of course, it also benefits Mega to keep everything encrypted for its own ‘see no evil’ purposes.”

It’s up to the user to decide whether to encrypt a file, Dotcom responded.

Dawn Raid

Before dawn on Jan. 20, 2012, New Zealand police, cooperating with U.S. authorities, raided Dotcom’s rented mansion in an Auckland suburb, using two helicopters and 27 officers, some armed with assault rifles and gas canisters.

The officers seized 18 luxury vehicles at the home, including a 1959 pink Cadillac, while Megaupload sites were shut down worldwide and his bank accounts frozen in Hong Kong. Dotcom spent four weeks in jail before winning his release on bail.

The stage show unveiling the new website included characters dressed in Swat-like gear, with replica assault rifles, rapelling from the roof of Dotcom’s home, while a helicopter with FBI printed on the side hovered overhead.

“This is not about mocking any government or Hollywood,” Dotcom said before the staged raid. He then went on to accuse the U.S. government of “staging legal warfare” through copyright laws.

“To those who use copyright laws to stifle innovation, you will be left behind on the side of the road of history,” Dotcom said.

Copyright Infringement

Dotcom was indicted in Virginia for what U.S. prosecutors called the biggest copyright infringement in the country’s history, with the Megaupload site having generated more than $175 million in criminal proceeds from the exchange of pirated films, music, book and software files.

Peter Carr, spokesman for U.S. Attorney Neil H. MacBride, referred Bloomberg News to a statement Dotcom made in February to a New Zealand court, when he pledged not to resurrect the Megaupload site. Carr declined to comment further when contacted last week.

Dotcom, who turns 39 today, changed his name legally from Kim Schmitz. Megaupload.com advertised that it had more than 1 billion visits to the site, more than 150 million registered users and 50 million daily visitors. U.S. prosecutors, in court filings, said the site accounted for 4 percent of Internet traffic.

The site had employed 220 people, all of whom will be offered jobs with the new project, Dotcom said. The new site will also employ several hundred New Zealanders, from call center workers to web designers, he said.

Going Public

Dotcom said he hoped to list the new company on the New Zealand stock exchange. He didn’t say when he wanted it to happen.

Dotcom’s extradition hearing in Auckland was postponed last month from March to August. New Zealand High Court Justice Helen Winkelmann ruled on June 28 that warrants police used to search Dotcom’s home, ahead of his arrest, were overly broad and invalid. In December, Winkelmann granted Dotcom permission to sue New Zealand’s spy agency for intercepting his communications.

“Given how long this is going on, he needs to be able to make a living,” said Ira Rothken, Dotcom’s lawyer who also took to the stage at the unveiling, adding the legal team was satisfied the site doesn’t violate any laws.

The New Zealand case is Between Kim Dotcom and Attorney General. CIV2012-404-001928. High Court of New Zealand (Auckland). The U.S. case is: USA v. Dotcom. 12-cr-00003. U.S. District Court for the Eastern District of Virginia (Alexandria).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus