10 Years Ago the Feds Shut Down Megaupload
A decade has passed since Megaupload's servers were raided on behalf of the U.S. Government. On the same day, helicopters and police swarmed the estate of founder Kim Dotcom. The criminal enforcement action was supposed to put the larger-than-life Internet entrepreneur in the shadows, but the opposite happened. From: TF, for the latest news on copyright battles, piracy and more.
At the end of 2011, Kim Dotcom dropped the “Megaupload Song.”
The track, a blatant promotional piece for the file-sharing site, featured top artists such P Diddy, Will.i.am, Alicia Keys, Snoop Dogg, and Kanye West.
This unprecedented advertisement came as a complete surprise to friends and foes. Not just because of the sheer star power, but also because Kim Dotcom himself wasn’t particluarly public at the time.
Locally, the New-Zealand entrepreneur enjoyed some fame, living the high life in a multi-million dollar mansion. And in gaming circles, he was a legend as well, albeit under his nickname MEGARACER. The public at large, however, hadn’t heard of him. That would soon change.
On January 20, 2012, one day before his 38th birthday, police officers stormed his home in a military-style raid. Dozens of police swooped the estate in helicopters, including several members of New Zealand’s elite counter-terrorist force.
Dotcom’s bodyguard Wayne Tempero later recalled that the officers were armed with assault rifles and sidearms when they entered the premises just before 7 AM that morning. Tempero was in handcuffs soon after.
Megaupload’s founder initially thought that the helicopter he heard could be guests arriving for his birthday party. However, when they knocked down the door, he realized that the situation was more threatening. There were certainly no gifts.
After hearing all the noise, Dotcom fled to a pre-arranged safe room in the house. He stayed in this “red room” reportedly with a shotgun by his side, until police arrived. That took a while, as the officers initially targeted another door, which actually led to a broken service elevator.
“I heard loud banging noises. I was just scared and worried. I thought I’d better wait for them to come to me rather than popping out and scaring someone who might shoot me,” Dotcom later said.
While the raid was being carried out in New Zealand, law enforcement started to pull the plug on Megaupload as well. Hundreds of servers were taken offline and other Mega properties such as Megavideo disappeared as well.
These actions soon revealed the unprecedented scale at which the site was running. In the space of a day, millions of people were left without their favorite file storage and sharing platform, forced to find a new home.
This instantly boosted the traffic numbers of competitors such as Depositfiles, Uploaded.to, Hotfile, and Rapidshare with many others welcoming hundreds of thousands of extra visitors.
While this traffic was welcome, the criminal charges against Dotcom and his colleagues were seen as a major threat by these former competitors. In response, several sites canceled their payments to uploaders and Filesonic and Fileserve banned third-party downloads completely.
Needless to say, Hollywood saw Megaupload’s shutdown as a massive success. This was corroborated by an MPA-backed study that linked Megaupload’s demise to a boost in digital revenues. However, there’s is also research that suggests that some films were negatively impacted.
There is no denying that Megaupload was a massively successful business. Today, the US Government is still trying to extradite Kim Dotcom. However, if they had waited a little bit longer, Megaupload would have come to the U.S. voluntarily.
A few months after the raid we spoke to Hong Kong-based corporate advisor Robert Lim, who had begun preparing Megaupload for a potential IPO and a listing on a U.S. stock exchange.
“Megaupload management had discussions with a number of the ‘Big Four’ largest international professional accountancy firms, which handle the vast majority of audits for publicly traded companies,” Lim said at the time.
“These Big Four firms were invited to be the auditor and to work together with management to build out a road map to prepare Megaupload for an IPO,” he added.
Instead of a billion-dollar IPO, the Mega empire collapsed, taking the personal files of millions of people down with it. To give an idea of the scope, research from Boston’s Northeastern University estimated that, aside from pirated content, at least 10.75 million legitimate files were taken offline for good.
There were also attempts to make it possible for millions of former Megaupload users to retrieve their personal files. However, in recent years there hasn’t been any update on this front, and it’s unlikely that this will change anytime soon.
This means that former users, which included FBI and NASA employees, as well as more than 15,600 members of the US Military, may never see their files again. Hundreds of mirrored servers remain safely stored as evidence, however.
No effort was spared to make an impact. In the months after his arrest, Dotcom and his team worked on a Megaupload successor called MEGA, which launched exactly a year after the raid.
This wasn’t just a regular launch, as Dotcom invited the international press to his home, to witness a partial reenactment of the police action twelve months earlier. Again, the scale of this event was unprecedented for a file-storage service.
MEGA, which focuses on encrypted file-sharing, became an instant success and is still doing very well. However, Kim Dotcom later resigned and moved on to focus on other ventures. This included the music service Baboom, which became inactive a few years ago.
Dotcom later announced yet another content-sharing and monetization platform titled K.im. After crowdfunding close to a million dollars back in 2016, progress has been slow. According to a roadmap published on the site, it was supposed to launch at the end of 2021. That didn’t happen.
It is impossible to summarize the Megaupload aftermath and Dotcom’s ventures in a single article. The above is just a small selection and we haven’t even touched on the legal side yet.
Megaupload was shut down as the result of an indictment by the U.S. Department of Justice, which accuses the “Mega Conspiracy” of several copyright and fraud-related charges. These are still pending.
Thus far, only one former Megaupload employee has appeared in a US Court. Estonian programmer Andrus Nomm, who reportedly earned $3,200 per month, pleaded guilty to criminal copyright infringement and was sentenced to a year and a day in prison.
Among other things, Nomm stated on the record that Dotcom and his former colleagues knowingly profited from copyright infringement.
Dotcom himself continues to fight his extradition until this day. Together with his former colleagues Mattias Ortmann and Bram van der Kolk the trio has been in and out of court for a decade now.
In 2020, the Supreme Court of New Zealand ruled that the Megaupload trio can indeed be extradited to the United States. However, this isn’t set in stone yet, as judicial reviews are still pending.
In addition to the criminal prosecution, the MPA and RIAA have also filed civil suits in US federal court, which remain pending until there’s progress in the criminal case.
How long this will take is unknown, but it could take several more years. Or perhaps even another decade. In other words, mega long.
Dotcom Looks Back
Dotcom also marked the 10 year anniversary on Twitter today. He notes that despite the shutdown and all the legal costs, piracy is still here today. And ironically, Joe Biden, the man who he holds responsible for Megaupload’s demise, is now President of the United States.
Meanwhile, Megaupload’s successor Mega is now three times bigger than the original site.
“Mega is totally lawful just like Megaupload was. That’s evidenced by the fact that no attempt was made to shut it down. An admission that they got it wrong,” Dotcom writes.
In hindsight, we often wondered whether it was a coincidence that the “Megaupload Song” launched just a few weeks before the indictment was announced. Given all that has happened since, the PR campaign may also have been Dotcom’s first defensive play, in anticipation of what was about to come.
From: TF, for the latest news on copyright battles, piracy and more.