Kim Dotcom and Megaupload: The Birthday Raid That Shook the Internet

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On January 19, 2012, Kim Dotcom was marking his 38th birthday in a leased 30 million dollar mansion in Coatesville, New Zealand, with a helicopter on the lawn and a fleet of luxury cars outside. Then local police, acting with the FBI, raided the estate, seized his assets, and froze his accounts. The same day the U.S. Department of Justice took every Megaupload domain offline. The company he had incorporated in Hong Kong in 2005 had grown to 50 million daily visitors, 25 petabytes of stored data, and one percent of all fixed internet traffic in North America.

This episode follows how Dotcom built that empire in a legal gray area and why he refused to keep quiet about it. A celebrity-filled promotional video in December 2011 provoked Universal Music Group, a lawsuit followed, and one month later came the indictment. Prosecutors called Megaupload a criminal conspiracy built on piracy. Defense lawyers called the case a novel theory of law that treated ordinary server maintenance as evidence of crime.

• The Megasong video featured Kanye West, will.i.am, Alicia Keys, and Snoop Dogg endorsing Megaupload, and Universal had it pulled from YouTube through a private content management agreement rather than a DMCA notice.
• Authorities seized 17 million dollars in physical assets while Hong Kong customs froze more than 40 million dollars in company funds, and Finn Batato, Mathias Ortmann, and Bram van der Kolk were arrested alongside Dotcom.
• Prosecutors pointed to a rewards program that paid uploaders of popular files and to a single user known as VV, whose nearly 17,000 uploads drew 334 million views.
• Millions of legitimate users lost their files overnight, the Electronic Frontier Foundation went to court on their behalf, and Carpathia Hosting spent 9,000 dollars a day keeping the seized servers running.
• Anonymous answered with a huge denial of service attack on the Justice Department, the FBI, and industry groups, and exactly one year after the raid Dotcom launched an encrypted successor called Mega.