Ground units, gates are open
On January 20, 2012, police raided a mansion in New Zealand at the request of the FBI.
Confirm located target.
Roger.
Judging from the military-style raid, you’d think they were after a terrorist or some
other dangerous criminal.
But the man renting this mansion north of Auckland was an internet entrepreneur who
ran one of the most popular websites in the world.
Megaupload was the 13th most frequently visited site on the Internet at its peak.
It claimed 50 million daily visits, accounting for 4% of the total traffic on the Internet.
Users could view any files people shared - movies, music, and TV shows.
Hello everyone, this is Kim Dotcom
Kim Dotcom, also known as Kim Schmitz or Kimble or Kim Tim Jim Vestor created Megaupload in
2005.
He is larger than life.
Standing at 6’7” and over 300 pounds.
As a successful entrepreneur in his native Germany, he had a knack for finding financial
opportunities in technology.
He realized back in 2005 that there wasn’t an easy way to send big files to family and
friends.
So, he created Megaupload.
If a file was too big to share by email, you could upload it to megaupload.com, and then
share a unique link so your family and friends could access the file from the cloud.
People did use Megaupload for legitimate purposes.
However, Megaupload made it very easy to share large video files like movies and TV shows.
Authorities believe THAT was the main money maker - sharing pirated content.
It wasn’t immediately obvious there was pirated content available as there was no
search feature on the site so you couldn’t specifically look for pirated movies and shows.
Instead, Megaupload relied on third-party sites to publish URLs.
For example, if you visited alluc.org, it would contain a megaupload.com link.
Or when an FBI agent investigating the company visited sidereel.com to search for an episode
of Modern Family, they found 60 URLs hosted on Megaupload’s sister site, Megavideo.com
which streams video.
Although copyright holders could submit a claim to try to get the material taken down,
the U.S. government said the takedown request only removed the URL link in question, not
the actual copyrighted content, and since multiple URLs pointed to the same file, the
content would still be available through other undisclosed URL links.
Hollywood’s major film studios were livid.
The FBI accused the Mega brand of costing film studios and record companies more than
$500 million.
Perhaps in a bid to get some support on his side, Kim Dotcom released a bizarre music
video with recording artists and celebrities praising Megaupload.
When I gotta send files across the globe, I use Megaupload.
Mega mega upload.
But apparently, that wasn’t enough to appease Hollywood.
Authorities moved in on Megaupload though Washington has denied it bowed to pressure.
Mr Dotcom has been shown the warrant to search the property
They timed the massive raid to coincide with Dotcom’s 38th birthday celebration which
they expected would be attended by other Mega executives.
They also happened to make the move on the same day U.S. lawmakers axed anti-piracy legislation
after heavy criticism from the public.
They found Kim Dotcom sheltered in his panic room
inside his mansion with a shotgun.
They arrested him and as well three other executives during the raid.
Chief Marketing Officer Finn Batato, Lead Programmer Bram van der Kolk,
Chief Technical Officer Matthias Ortmann.
They were charged with: racketeering, copyright infringement, money laundering, and criminal
copyright infringement.
If the FBI had their way, the men would be extradited to America
each to face up to 55 years in prison.
Megaupload was officially shut down.
Usually, copyright infringement is a civil matter and does NOT constitute a criminal
offense in the U.S.
Dotcom’s lawyers argued that copyright infringement is NOT a criminal offense in New Zealand
where he was residing at the time, and therefore, not an extraditable offense.
And besides, Dotcom wrote in a blog post: “...how could we be criminally responsible
for the actions of others?”
As in users who chose to upload pirated material.
Apple co-founder Steve Wozniak made the same argument, pointing out you can’t shut down
the Post Office if someone sends drugs through the mail and he saw Megaupload as the post
office.
But the U.S. government saw it differently.
Washington believed Megaupload actively encouraged users to post copyrighted content and SHOULD
be held criminally responsible.
The Department of Justice wrote in this 191-page evidence report that Megaupload’s business
model incentivized users to upload popular pirated content.
They described how they had a rewards program that “offered to pay up to USD $10,000 to
users whose files were downloaded 5,000,000 times.”
They say Megaupload executives knew EXACTLY what they were doing.
Citing a Skype conversation in which the chief programmer said to the chief tech officer:
“we’re modern pirates :-)”
The Mega group apparently raked in a treasure trove.
The company is said to have earned $175 million - $25 million from ads and $150 million from
Premium memberships which offered faster, unlimited service.
Dotcom wasn’t shy about flaunting his lavish lifestyle.
In this music video posted to his YouTube channel, he showed off his superyacht, luxury
cars, speed boats, and private jet.
During the raid, authorities seized millions of dollars worth of assets - including his
cars and artwork.
Dotcom felt the raid was excessive and blamed it on the “subservience of New Zealand to
the US Empire and the corruption at the top of government”.
Turns out, New Zealand’s intelligence agency illegally spied on Dotcom leading up to the
raid.
The then prime minister John Key had to publicly apologize.
The injustice Dotcom felt he faced prompted him to set up a new political organization
in New Zealand, the Internet Party.
However, it failed to win any seats in the New Zealand House of Representatives during
the 2017 general election and hasn’t contested any elections since.
Ten years after the raid, in May 2022, two executives pleaded guilty to their involvement
in running Megaupload as part of a deal to avoid extradition to the US.
If Ortmann and van der Kolk are found guilty, they face a maximum of ten years in prison
in New Zealand – which is far less than what they could have faced in U.S. prison.
American prosecutors dropped their bid to extradite the fourth executive Finn Batato
after he was diagnosed with cancer.
Batato suffered greatly because of the whole ordeal.
He had flown in from Germany for Dotcom’s birthday bash when he was arrested during
the raid and wasn’t allowed to go home.
He was stuck in New Zealand.
Dotcom says Batato began drinking every day to drown out his sadness and it made him sick.
During his final years, he started a family in New Zealand but wouldn’t ever see his
three young children grow up.
He passed away in June at the age of 49.
As for his colleagues, Ortmann and van der Kolk say they wanted to put the decade-long
legal saga behind them, and are now contributing to society through Mega, a legitimate cloud-storage
site they set up after their arrest.
Dotcom’s two former colleagues are expected to testify against him as part of the deal,
but he doesn’t appear to hold any grudges, tweeting:
After 10 years of US lawfare I understand why they have given up.
I don’t blame them and I sincerely wish them all the best.
As for himself, Dotcom is out on bail in New Zealand as he fights extradition to the US.
He frequently posts updates on social media on life with his children and his second wife
Elizabeth Donnelly whom he married on the anniversary of the raid, on January 20, 2018.
How this saga plays out could be an important test of just how far the Americans can reach
when it comes to intellectual property rights.
Kim Dotcom has been cast as a visionary, online freedom campaigner, or, if the U.S. government
and Hollywood are to be believed, a swindler and a thief.
Which do you think he is?
Let me know by leaving a comment.
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Thanks for watching.
For Newsthink, I’m Cindy Pom