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Actors in police costume mock-arrest Megaupload founder Kim Dotcom, as he launches his new file sharing site "Mega" in Auckland January 20, 2013. Dotcom, who is fighting extradition to face U.S. charges of internet piracy, has launched a new cloud storage service called "Mega" at a function at Dotcom Mansion in Coatsville, Auckland. (NIGEL MARPLE/Reuters)
Actors in police costume mock-arrest Megaupload founder Kim Dotcom, as he launches his new file sharing site "Mega" in Auckland January 20, 2013. Dotcom, who is fighting extradition to face U.S. charges of internet piracy, has launched a new cloud storage service called "Mega" at a function at Dotcom Mansion in Coatsville, Auckland. (NIGEL MARPLE/Reuters)

Kim Dotcom re-enacts raid, arrest for launch of new Mega site Add to ...

Kim Dotcom, founder of outlawed file-sharing website Megaupload, said his new “cyberlocker” was not revenge on U.S. authorities who planned a raid on his home, closed Megaupload and charged him with online piracy for which he faces jail if found guilty.

Mr. Dotcom said his new offering, Mega.co.nz, which launched on Sunday evening as he and three colleagues await extradition from New Zealand to the United States, complied with the law and warned that attempts to take it down would be futile.

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In Mr. Dotcom’s typical grandiose style, the Associated Press reported the launch party featured a tongue-in-cheek re-enactment of the dramatic raid on his home a year earlier, when New Zealand police swooped down in helicopters onto the mansion grounds and nabbed him in a safe room where he was hiding.

“Mega is going to be huge, and nothing will stop Mega — whoo!” a gleeful Mr. Dotcom bellowed from a giant stage set up in his yard, seconds before a helicopter roared overhead and faux police agents rappelled down the side of his mansion. Mr. Dotcom eventually ordered everyone to “stop this madness!” before breaking out into a dance alongside miniskirt-clad “guards” as music boomed.

Bravado aside, interest in the site was certainly high. Mr. Dotcom said half a million users registered for Mega in its first 14 hours.

“This is not some kind of finger to the U.S. government or to Hollywood,” Mr. Dotcom told Reuters at his sprawling estate in the bucolic hills of Coatesville, just outside Auckland, New Zealand, a country known more for sheep, rugby and the Hobbit than flamboyant tech tycoons.

“Legally, there’s just nothing there that could be used to shut us down. This site is just as legitimate and has the right to exist as Dropbox, Boxnet and other competitors,” he said, referring to other popular cloud storage services.

His lawyer, Ira Rothken, added that launching the site was compliant with the terms of Mr. Dotcom’s bail conditions. U.S. prosecutors argue that Mr. Dotcom in a statement said he had no intention of starting a new Internet business until his extradition was resolved.

Mr. Dotcom said Mega was a different beast to Megaupload, as the new site enables users to control exactly which users can access uploaded files, in contrast to its predecessor, which allowed users to search files, some of which contained copyrighted content allegedly without permission.

A sophisticated encryption system will allow users to encode their files before they upload them on to the site’s servers, which Mr. Dotcom said were located in New Zealand and overseas.

It offers 50 gigabytes of free storage, much more than similar sites such as Dropbox and Google Drive, and features a drag-and-drop upload tool.

Each file will then be issued a unique, sophisticated decryption key which only the file holder will control, allowing them to share the file as they choose.

As a result, the site’s operators would have no access to the files, which they say would strip them from any possible liability for knowingly enabling users to distribute copyright-infringing content, which Washington says is illegal.

“Even if we wanted to, we can’t go into your file and snoop and see what you have in there,” the burly Mr. Dotcom said.

Mr. Dotcom said Mega would comply with orders from copyright holders to remove infringing material, which will afford it the “safe harbour” legal provision, which minimizes liability on the condition that a party acted in good faith to comply.

But some legal experts say it may be difficult to claim the protection if they do not know what users have stored.

“What he’s trying to do is give himself a second-string argument: ‘Even if I was wrong before, this one’s all right because how can I control something if I don’t know that it’s there?’ ” said Sydney attorney Charles Alexander, who specializes in intellectual property law. “I can understand the argument; whether it would be successful or not is another matter.”

To Dotcom, the concept is very simple.

“If someone sends something illegal in an envelope through your postal service,” he says, “you don’t shut down the post office.”

The Motion Pictures Association of America said encrypting files alone would not protect Mr. Dotcom from liability.

“We’ll reserve final judgment until we have a chance to analyze the new project,” a spokesman told Reuters. “But given Kim Dotcom’s history, count us as skeptical.”

The German national, who also goes by Kim Schmitz, expects huge interest in its first month of operation, which would be a far cry from when Megaupload went live in 2005.

Mega’s launch starts the next chapter of the Dotcom narrative, dotted with previous cyber crime-related arrests and whose twists and turns have been scrutinized by all facets of the entertainment industry, from film studios and record labels to internet service companies and teenage gamers.

The copyright infringement case, billed as the largest to date given that Megaupload in its heyday commanded around four per cent of global online traffic, could set a precedent for internet liability laws and depending on its outcome, may force entertainment companies to rethink their distribution methods.

A year on, the extradition hearing has been delayed until August, complicated by illegal arrest warrants and the New Zealand government’s admission that it had illegally spied on Dotcom, who has residency status in the country.

Last January, New Zealand’s elite special tactics forces landed by helicopter at dawn in the grounds of Dotcom’s mansion, worth roughly $25.05-million and featuring a servants’ wing, hedge maze and life-size statues of giraffes and a rhinoceros, to arrest him and his colleagues at the request of the FBI.

Police armed with semi-automatic weapons found Mr. Dotcom alone in a panic room in the attic, while outside, a convoy of police cars and vans pulled up in the driveway. Around 70 officers took part in the raid.

They left with computers, files and some of Mr. Dotcom’s fleet of Rolls-Royces, Mercedes and a vintage pink Cadillac tricked with personalized license plates screaming “HACKER,” “EVIL,” and “MAFIA.”

“Every time you hear a helicopter, you automatically think, ‘Oh, another raid’, so it’s something that stays with you for a long time,” said Mr. Dotcom, who says he and his wife still panic when they hear sudden, loud noises in the house.

“I had to grow up, you know, I was a big baby,” he said. “Big baby with too much money usually leads to baby craziness.

“I am going to be more of a person that wants to help to make things better and help internet innovation to take off without all these restrictions by governments. That is going to be my primary goal if this business is successful.”

With files from The Associated Press

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