Kim Dotcom: mega-shrewd

by Peter Griffin / 17 November, 2012
It remains to be seen how far Kim Dotcom’s knack for wrong-footing the copyright cops will get him.
Kim Dotcom outside the Auckland High Court

Of all the victories Kim Dotcom has racked up in the past few months, few will have given him as much satisfaction as appearing on the cover of this month’s Wired magazine. That’s the spot usually reserved for such luminaries as boyish Facebook founder Mark Zuckerberg and Amazon’s Jeff Bezos, and is the tech world’s equivalent of making the cover of Time. It means Dotcom is considered a disrupter – someone changing the rules of the game. Good or bad, right or wrong, the tech world doesn’t judge. In its book, the impact of a game-changing technology or new online business model is the main measure.

Dotcom’s success with Megaupload and subsequent legal fight with the US Department of Justice have made him someone worth watching, in the same way Napster founder Sean Parker and the international hacking group Anonymous attracted widespread fascination. Dotcom, a shrewd self-promoter, has milked the publicity. As Wired hit newsstands, he announced new venture Mega, a successor to Megaupload that will be designed to avoid the fate of its predecessor. Mega has the same digital locker features of Megaupload, allowing users to upload files and share a link that other people can click on to download the content. But this time user files will be encrypted – encoded by an algorithm that makes them inaccessible and only unlockable with a matching decryption key.

Users will share that decryption key with the people they want to unlock and access the files. Encryption is fundamental to security in the tech world. Every time you log on to an internet banking website or send an email from or Gmail, you are doing so over an encrypted connection, so the data transmitted between your web browser and the server at the other end cannot be intercepted. But Dotcom is less concerned about the security of users’ files than he is about protecting himself from the claims of copyright infringement that in January saw Megaupload taken offline. He wants users’ Mega activity to be invisible to him so he can wash his hands of responsibility for policing it. How can he dob you in to the copyright police if he can’t see what you are sharing?

If Mega launches as planned on January 20, the anniversary of the police raid on Dotcom’s Coatesville mansion, it won’t be the first file-sharing service to offer encryption. But the automated nature of the encryption, which will encode user data “transparently in your browser, on the fly”, and the high profile of Dotcom and the Mega service, could see it grow to rival the popularity of Megaupload, which at its peak allegedly accounted for 4% of global internet traffic. If that happens, it will enrage those cracking down on online piracy. It will accelerate efforts to rewrite legislation so authorities have the right to demand access to decryption keys.

This is a legal grey area, particularly in the US, where the 5th Amendment to the Constitution protects people from incriminating themselves. On peer-to-peer file-sharing networks, people are using virtual private networks to encrypt their internet traffic and tunnel across the web anonymously to avoid the type of laws that in this country can see you hauled before the Copyright Tribunal to face a $15,000 fine for copyright infringement. But using VPNs is fiddly. The majority of file sharers don’t employ them. Mega will make encryption effortless. Ironically, the requirement to use a decryption key to unlock content will also create an impediment that will slow the type of sharing that Megaupload encouraged.

Nevertheless, encryption threatens to mask ever-increasing amounts of internet activity. That is attracting the attention of copyright enforcers and represents the next battlefield in the online piracy war, in which Dotcom could find himself, deliberately or not, a mega player.
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