Mega and the Revenge of Kim Dotcom
Image: Brendon O’hagan for Forbes
im Dotcom, aka Kim Tim Jim Vestor, aka Kim Schmitz, doesn’t act much like a man with a net worth in the negative. At 11 am on a Tuesday he’s driving me around on a golf cart “safari” of his 60-acre estate outside of Auckland, New Zealand. We swing past his 2,000-bottle-a-year vineyard and barrel down a hill toward his $30 million mansion, complete with a hedge maze, a five-flatscreen Xbox room and a 75-foot cascading water display.
Given that he owes millions of dollars to defense lawyers and now has to raise his five children on a $20,000-a-month government allowance meted out from his frozen bank accounts, wouldn’t it be wise to live a slightly simpler life?
“No way,” he says, leaning his massive 6-foot-7, 300-plus-pound body onto the cart’s steering wheel. “That would be allowing them to get away with this stunt. I won’t accept that. By staying here I’m saying, ‘Ef you! You can’t defeat me!’”
The “stunt” Dotcom refers to is the police helicopter raid on his compound that made global headlines 15 months ago, timed to coincide with the US indictment that shut down his ultrapopular constellation of Mega-branded websites under charges of hosting half a billion dollars’ worth of pirated movies and music. Overnight Dotcom went from an underground entrepreneur to one of the most public and controversial figures on the internet. His site domains, including the flagship Megaupload.com, are now the property of the US government. His servers have been ripped out of data centres around the world and sit in evidence warehouses. He’s had to let go of 44 of his 52 house staff as well as Megaupload’s hundreds of employees. All but two of his 18 cars have been seized or sold.
But today Kim Dotcom is putting all of that in his souped-up golf cart’s rearview mirror. His new storage startup, called simply Mega, launched January 20. It’s already exploded to exceed 3 million registered users. His engineers tell me it’s moving 52 gigabits of data per second—that’s nearly half the entire bandwidth of New Zealand—and growing at 30 percent a week. The traffic has been driven in part by Dotcom’s own larger-than-life persona: An internet mogul who doubles as either an intellectual-property-stealing supervillain or an oppressed freedom fighter, depending on whom you ask.
Either way, Dotcom has learned from his legal misadventures and promises that the copyright cabal will find this company much harder to snuff. Mega is “the Privacy Company”. Unlike Megaupload, everything sent to Mega is encrypted. No one can decrypt those scrambled files except the user—not the FBI, not the Motion Picture Association of America, not even Kim Dotcom. Mega claims to keep the eyes of both authorities and snoops off its users’ files, a libertarian ideal that fits neatly into Dotcom’s personal narrative as a victim of the US government’s overreach into the digital world.
“Mega is not just a company,” he says. “It’s a mission to encrypt the internet. We want to give the power back to the user.”
The revenge Dotcom is planning, he says, will be twofold: Not only will his new, better company be immune from his enemies, but he also hired a team of 28 global lawyers who he believes will make the US government pay for treating the internet as a subjugated colony.
“This is a low point,” Dotcom says quietly. But his sulking doesn’t last long. “I’m going to be bigger than ever.”
In 2009 a study by traffic-research firm Arbor Networks and the University of Michigan found that a little-known collection of sites was responsible for a gargantuan amount of the internet’s data—their hosting firm was using twice as much bandwidth as Facebook. The sites, including Megaupload and Megavideo, seemed to have been registered in 2005 to one Kim Schmitz, a German ex-hacker and ex-con. But a spokesperson at Megavideo told Forbes at the time that no person by that name was associated with the company.
“Technically that was correct,” says Megaupload’s 39-year-old founder years later. In 2005 Kim Schmitz had legally changed his name to Kim Dotcom, and he saw no need to reveal his new identity to a nosy reporter.
Kim Dotcom may have been publicity shy, but Kim Schmitz had already been in plenty of headlines. Growing up in the northern German city of Kiel, the teenage Schmitz had been a notorious figure on the early internet underground. Before the advent of the web, Schmitz ran a bulletin board service called ‘House of Coolness’ that users remember as a hub for trading videogames with cracked copy protections and stolen calling cards. (Today Dotcom so vehemently denies that the service hosted substantial copyright-infringing material that he threatened legal action to prevent us from publishing this story.)