TechStuff Classic: TechStuff Gets MegaUploaded

November two thousand twelve. Chris Pallette and I talked about the service mega upload, which right around that time was getting shut down. So what's the story behind it? Well, let's find out. Today. We wanted to talk about a controversial subject, a couple of different controversial subjects. There's a mega controversy, yes, mega upload, and uh, any of you have probably heard about mega upload. Some of you may

have even used the service. Some of you may be going to mega upload dot com right now and wondering if you're in trouble because you see that there's a big takedown notice where the site used to be. But we wanted to talk about what it is, what the controversy is around it, what the various legal issues are surrounding it, and a lot about the Uh. I guess flamboyant is an appropriate word, uh, head of mega upload

Kim dot com. Yes, um, yeah, So I guess we can start off why not at the beginning, back in two thousand five kim dot com. And when I say at the beginning, I'll go back further than this. Later on we talked about the legal issues. But he founded a site uh turned out to be a family of sites, but we tend to just call it mega upload. And the idea behind this was kind of like a very

specific implementation of cloud storage. So the idea was that users could upload files to this service, mega upload, and then allow other people to download those files and on its own. If that's all we say, that's not there's nothing controversial about that. That's just a method of distributing data. The problem comes in as to the nature of that data and whether or not that data had any intellectual

property rights associated with it. That perhaps the user who uploaded the file did not have access to our authorization to uh to distribute that file, and that's the crux of the problem. So mega upload is what we call locker site. Yes, and you you create a locker where you upload the files other people can download them and uh, and there are some interesting things about mega upload. For example, uh, uploading a file didn't guarantee that that file was going

to be stored there forever. Uh. The the service would actually delete files out of its storage if they were not being downloaded enough. At least, that was sort of the That was the allegation that the United States government made against Mega upload when building its case. They said that in order for a file to be hosted, it had to be popular, it had to reach a certain threshold of popularity, and if people stopped downloading it, the

file would no longer be hosted on mega upload. UM. So that's kind of a way of to conserve space. You know, the files that are really popular stay available. Files no one seems to want go away, and you don't have to worry about hosting a file forever. Because of course, the more popular the site got, the larger its um requirements were to for for hosting space because I mean, these digital files are taking up hard drive space somewhere on servers, so you have to be able to,

uh to meet that demand. And one way of doing that is to phase out any files that are not particularly sought after. Yeah, now, you might be saying, you know, well, how is this different from something like dropbox or perhaps YouTube? Um? And there are big differences, um, because some of the charges that have been filed basically accused the people behind

mega upload. UM. Kim dot com is sort of the face of mega upload, but the he had a handful of partners who were closely were you know, working on it with him, very closely. UM. So the people behind mega upload have been charged with basically, um, not only providing storage space, but knowing what was in that storage space and encouraging people to upload popular content which may or may not have been UM, you know, stuff that

violated copyright. And that's really that that's you know, the question. Those are the questions that you know, how how far did it go? Right? The allegations. The allegations actually go so far as to claim that the the owners of mega upload paid out money to people in order to encourage them to upload popular files. And by popular, we're talking about stuff that violates intellectual property. Uh. When you

when you just say popular, that could be anything. But in the case that was brought against mega upload and its founders, they're specifically talking about things like movies or music. Really, movies is the big one. But it's not just movies, it's television and music as well. Saying all right, well there are people uploading entire libraries of files to your site. Uh, they don't have the authorization to do that. People are

essentially using mega upload to perpetuate piracy. And so ultimately, and when you look at this, you can figure out there are certain industries that are very much pushing for action against mega upload. It's it's pretty safe to say that this was not just a government agency saying, oh, here's a bad guy, we need to go after him. This these are industries that are using political pressure to go after a company that they see as a threat to their business model. Then, in itself is not necessarily

a bad thing. You want to protect your business, you know, otherwise, if you don't protect your business, you go out of business. However, there are some questions as to the execution of this and whether or not it oversteps bounds. For example, a mega upload we haven't mentioned this yet. It is a company. It's a company that's based the company itself is based

out of Hong Kong. So that raises some questions because it's the United States that's primarily going after Kim dot com and the other people behind Mega upload, and the United States does not have jurisdiction in Hong Kong. On top of that, Kim dot com and the other people who were rounded up we'll talk about the round up in a second. They were all in New Zealand. Also, last I checked, not within the jurisdiction of the United States. Um.

Pretty sure. I mean I could be wrong. It could be that in the Hobbit, I'll see that, you know, federal agents are knocking down the enemy's door and uh and in Mirkwood spoiler alert, but it would surprise me. Um. However, some of the company's servers were based here in the United States. That that was one thing. Yeah, but that was done on purpose. Us. Um, why was that done on purpose? Well, remember when I mentioned YouTube a few

minutes ago. Um will YouTube? From time to time people upload content to the site that infringes on someone's copyright. You know, they take and rip a movie and stick it on YouTube, which is pretty much blatantly illegal. The thing is, what the idea is that under current UH United States law, the copyright owner can contact YouTube and say hey, take that down, and YouTube is supposed to take it down and and Kim Kim dot com has

said that Mega upload did that. Um. Now see there there's there's what is called safe Haven, which was part of the d m c A Digital Millennium right, and basically it says, hey, look, you know you're providing the storage space online. That doesn't make you necessarily wiable for what people do with that space. If they put uh material up there that infringes upon someone's copyright. As long as you take it down when you're asked to by the copyright holder, that's not it's not your fault that

that people do that. What they're saying that Mega upload did, however, was um basically not only uh host that they didn't necessarily take it down immediately upon being asked. They might have been selective in what they took down, and they were encouraging people to post popular content. So they're saying, no, you guys don't qualify for safe Haven. This is completely different. And they're being brought up on criminal charges yeum, which is different than a simple lawsuit. Hey, we're suing you

because you did not take this down. Yeah. The the d m c A is very uh it lays this out in a very specific way that the ideas that it will protect the service providers so that they are not um shouldered with all the responsibility for providing what is a valuable service to people who might use it in ways for which it was not intended or in illegal ways. Uh. So you can argue whether or not

Mega upload was intended for illegal use or not. That's in fact the federal federal officials are very much making that argument. But UH, for the d m c A to apply for that safe haven to apply, the the owners of the service cannot knowingly host illegal material. They are told about the illegal material, they have to remove it.

One of the allegations against Kim dot Com and Mega upload is that when they were told about illegal material, what they would do is remove a link to that illegal material, but they would not remove the file itself. So in other words, the file still exists on mega upload.

They just removed whatever link was reported. Well, the way mega upload worked was that if you were to try and upload a file, let's say that let's say Chris and I have decide did to uh to throw caution to the wind and embrace our darker natures and to UH to dive headfirst into the world of illicit film trading online. And so Chris and I both have the same idea at the same time. We have both decided that now is the time for us to upload a copy of the Steven Spielberg Mega hit Howard the Duck.

And so Chris uploads Howard the Duck before I do because he has a better internet connection. So that Howard the Duck file, that specific hash gets uploaded up to mega upload, and then I do the same thing. Now, the file that I'm using is based off the same one that Chris made, so it's got the same data, same everything. When I uploaded mega upload, looks and says, oh,

wait a minute, I've already got this file. So instead of uploading this to your locker, why don't you would you prefer it if we just um linked to it and added another link to the already existing file because it's the same information. This way, you don't have to upload the whole thing. You just add the link. And you say, because you don't want to have to come up your internet connection all that time, or I say, in this case, because it's using my example, I said, sure,

just put the link in. Well, the complaint. One of the complaints that the FEDS made against Mega upload is that if you were the content owner if you're the intellectual property rights owner of Howard the Duck of the film Howard the Duck, and you wanted to protect it, and you saw that there was a link to a mega upload locker that contained that movie, you would send that complaint to mega upload and then they would apparently remove the link, the specific link you mentioned. However, I

also have a link to that content. It's a different link. It's the same file, which means that because they did not delete the file itself, there's still a pathway to get to that file. All they did was close off path, but they left another path open. That's the allegation. That's what the federals, federal officers are saying. They're saying, well, yeah, you would remove this link, but the file still existed and there were still other links to that file, so

you didn't solve the problem. All you did was close one door, but there were you know, however, other many doors open, so people could still get to it and the problem was not fixed. Um, so that's that's one of the main arguments here. Now, the way this all went down was way back on January twelve. Uh. Do you remember January two thousand twelve, fact, when we were wondering if Apple was going to have an iPad three and no idea that they would also have an iPod

pot iPad four that same year. Um, that's just a light dig. So on January nine, the Department of Justice seized the UH mega upload dot com site and all of its family of sites like mega video and things like that, and they shut it down and they began to pursue a criminal case against the owners and operators

of that site. On January two thousand twelve, Hong Kong Customs ended up freezing assets belonging to the company and on that On January twenty, in New Zealand, UH New Zealand police, acting under the the direction of United States federal officers, led a raid against a mansion that was being leased by Kim dot com UM and had happened to have several other mega upload people there at the time because they were celebrating his birthday, so they timed

it out to raid on his birthday. Uh. They went in. They seized around seventeen million dollars worth of assets, including vehicles, and art, so stuff that was not related directly to the website. But the federal officers claim that these are things that Kim dot Com bought through money laundering and other means. Um specifically that that allegation that Mega upload paid people to upload illegal material to their site. Um. And if you're wondering how does Mega upload make money,

because we didn't really talk about that. There's two ways you could be a subscriber, but that's really the kind of a minor way that they generate revenue. They mostly generate rate revenue through ads. Well, they serve up ads over when when you're downloading, that's when the ads get served to you. So if you download a file, that's

when you start seeing these ads. So there's an incentive to provide as many downloads as possible because the more downloads there are, the more ads Mega upload serves, the more money it gets. So that's where a lot of this cash came from. So uh that that all went down on January and went pretty quickly, but dot com and was not resting. He hired on some lawyers and began to fight back against the actions taken against him

and against Mega Upload. So March five, two thousand twelve, the United States files for an extradition request for in New Zealand courts, saying we want to extradite him to the US and try him there for crimes. Keeping in mind again Hong Kong Company New Zealand resident actually New Zealand citizen. He he I guess resident is the right word. He did apply for residency and was granted it. He's actually German, German born. Yeah, what you could tell by

the dot com last name. Actually he changed that name. He changed that name partially because of his his childhood. Yeah, he was. He was. His original name is Kim Schmitz. And actually his his past is definitely one of the reasons why there's so much interest in him and why I think, uh, the United States government felt fairly confident going after him because he he is not He doesn't have a squeaky clean past. He was he was tried

for embezzlement. He was a teenage internet sensation in the sense and like an investment sensation, and was was accused of with charges of insider trading and get up, sorry, keep trying to interrupt. Go ahead, I shouldn't I apologize? Please do um, there's a great article in Wired magazine and on Wired dot Com about him that Charles Graber wrote, Um, actually brought the dead Tree version with me to it. Um, But yeah, it's definitely it's a really did you read

this in your research? Um? I thought it was a really good balanced article because it talks about some of his more positive, you know, attempts to be more positive and some of his past which has been you know, not always on the up and up. I mean he in school, he wasn't really a dedicated student. He preferred to uh apparently likes to sleep late, and he liked to skip class and sleep in basically, but he got an interested in computers when he was a teenager and

and really embraced it. He took off with it. Yeah. He he hacked into some pretty uh pretty notable systems like NASA. Yeah. Well, so he's he's definitely got h He's definitely got a history of being somewhat of a mischief maker. Um. But he got a good scare when

he was a kid too. He got in trouble with the law and uh, basically I get the sense, or at least the article paints him as somebody who, uh say, you know, once he got done with that, said hey, I I really don't want to mess with this again, but the thing is too He also and this also does not paint or did not did not help him with this um recent arrest. And uh, he kind of

paints himself as a high roller gangster type. Yeah, he's that seventeen million dollars with the art some of those cars that they see, he's like some of the cars were hundreds of thousands of dollars in value for an individual car. One of his associates said, hey, you know, we have a big car with a license plate that says mafia on it. But we're we're fooling around. We're not serious about that stuff, right, But the government it's

organized crime. They're doing it on purpose. They're thinking of it as like giant toys. He also had a helicopter. I mean, he had lots of stuff. We're gonna pause this mega upload for a moment in order to take

a word from our sponsor. On April thirty, two thousand twelve, UH, a New Zealand judge found that some of the assets in that raid were improperly seized and that paperwork was not correctly filed and as a result, they returned about seven fifty thousand dollars worth of assets to um to dot Com, who, by the way, was having some problems getting bail for a while, not not having not coming up with the money, but just getting the the option

of being able to post bail. Judge initially denied him that, saying that because he had a helicopter and because he was a man of pretty uh substantial means that he was a flight risk, and also citing his past as well, uh where he had a little bit of a history of hopping around a bit uh apparently to dodge authorities and investigations. Uh. But and another judge found later they said, well, yeah,

but we seized all his assets. He's not going anywhere, so we're going to grant him the option to post Bailuh. So that that did change well April three, when he got about seven or fifty dollars worth of the assets returned, including several of the cars. So it's not like it was just a big suitcase full of cash. H June two thousand twelve, New Zealand judge ruled that the search warrants were dot COM's property were not valid because they

were too general. Yeah, yeah. And in addition to that, there has been a question over whether UM or not the use of force that not not that you know, they shot their way in, but they came in with weapons and things that we're not supposedly allowed against UM

citizens of New Zealand. So there is some question as to that that that not only were the warrants not specific enough, but whether or not that the use of the techniques that they used during the raid on his house, whether that was appropriate and and they kicked the door down basically yeah. Well, and dot Com for his part, retreated to a safe room inside his house and apparently had a couple of firearms in there with him, which

made it made it look not good. He didn't he apparently was not holding the weapons, but he would have had access to them. And his response was that he thought that, you know, he didn't know what to think because all these people were trying to break into his home, so he retreated to the safe room in his house. Uh. The UM the officers say that he was trying trying

to escape and or delete incriminating evidence. Yea. They claimed that he had a basically a panic button that would have erased all of MEGA uploads files and he hold out will he hold out candy like button good times Well.

In July tenth, two thousand twelve, the extradition hearings were deferred until March two thousand thirteen, and New Zealand judge said the United States must prove that he was aware of and supporting internet piracy to support an extradition claim, and then on September two twelve, the Prime Minister of New Zealand called for an investigation to determine if government officials had been spying on dot Com and his associates illegally. So it's a very thorny uh issue as far as

the laws concerned. In fact, it gets even more complicated. There are some who say uh, some being dot COM's lawyer really, who say that the United States case against dot Com is attempting to use civil complaints as a criminal charge, which that that's not how that works. Civil courts and criminal courts in the United States. That's those

are two different things. But that at least some of the case against dot Com is uh is based in would be based in a civil court, not a criminal court, and yet they're using it as a criminal charge against him and other parts of the criminal charges would depend wholly upon how that civil case played out, so they can't If that's in fact true, they would not be able to uh to to lay these charges against dot Com until after the civil case was tried and there

was an outcome. UM. I think it's more complex from there. So it's it's uh, it says, a messy, messy situation, and as of the recording of this podcast, we can't be sure what the outcome is going to be. UH. There have been there's been more fallout from this beyond

just the press. UM. Anonymous decided to get involved UM, which is kind of hard to say because Anonymous is such a vaguely defined group that it could be two people and Anonymous who want to do something and then the entire group gets uh UM pointed at as saying they're the ones responsible. Now, it could very well be that of Anonymous all was behind us, or even a percent was behind it, but by the very nature of the group, which is a decentralized activist group, you can't

be sure, which is part of what protects them. Well. Anyway, some people apparently belonging to Anonymous, at least according to those who are looking into this, and it could be that that's all not true as well. UM started to launch attacks against websites UM, particularly websites belonging to the Department of Justice, the United States Department of Justice, in retaliation for the raids that were and and the shutdown

of Mega upload. So you had a distributed denial of service attacks going out across the Internet, fired from the canon of h of activists who may or may not belong to anonymous UM as another another salvo in this battle between well multiple parties at this point. Yeah, yeah,

and UM. To complicate matters. Now that you know Kim dot com is out on his own, he's also and again this is fairly recent um as at the time we're recording this, that he's created a new service just Mega In fact, it's m E dot g A, which is using the gabon H. Is that how you pronounce it UM anyway, Yes, they're using their country code, so it's emmy dot g A and that's on launching one on one year to the day of his arrest January.

The new service is supposed to go online. And uh, from what I've read about the new service, it's supposed to you circumvent the quote unquote problems. You'll see why I said that, Uh put in the fake scare quotes um for uh for this because they won't be able to see what's inside these lockers. Yeah. Everything gets encrypted when you upload a file. Uh, it gets encrypted within your browser. Yeah, and it so in other words, the owners of Mega would never be able to see what

content was stored on their service at all. It would all just be meaningless encrypted uh information. Right. So they so even if you were an intellectual property rights holder and you went to Mega and said, um, this file is violating our intellectual property, they'd say, well, we can't tell that because for us, it's just meaningless jumble of symbols. It doesn't there's no file here as far as we can see. Yeah. Also, there will be no servers in

the United States jurisdiction. Go into what I've read that would would that would protect them on those counts, or at least would come closer to protecting them, right. Yeah. The way you would access one of these files, of course, that you would get if you were to upload a file like let's say I upload a file of Howard the Duck and it's encrypted into Mega. I would want part of that transaction would be I would get a key that I could share with other people that would

allow them to decrypt whatever the file was. Yes, so I could send the key to Chris and say, saved you the trouble, big guy, here's the movie, and he could go and download it because he has the key. Anyone who does not have the key would not be

able to see what the heck that file was. Yes, when that would prevent the problem of needing D duplication, UM, you know the same file taking a filespace now would basically know that the same UH information was up there, but it wouldn't say what that information was specifically, So so they would have a better chance of pleading UH safe harbor in it's mostly too obviously protect the owner and UH caretakers of mega Chris and I will talk a little bit more about Mega uploaded just a second,

but I want to interrupt for these important messages. All this being said, you know, we've talked a lot about the piracy, and we've talked a lot about the allegations against mega upload UM and I probably should have said this much earlier in the podcast, but there are very legitimate ways to use these services that have nothing to do with violating intellectual property, property or piracy or anything

like that. Like if I have content that belongs to me and I want to be able to distribute it to all wide network and I cannot host it myself, something like one of these sites could be very useful. You know, I may not have any other distribution platform that I can use to get my content out there. So there are plenty of use cases where there's nothing wrong with using a site like mega upload to either

distribute or to get access to material. It's only in the case where that is unauthorized use of intellectual property that is the problem. Now that raises a question of well, what percentage of activity on mega upload uh revolved around intellectual property theft and whether and if it was a lot, were the founders aware of it or even complicit in it. Those are the points that need to be hashed out in court. I've also seen at least one judge in the United States say that he doubts this will ever

go to court in the US. He thinks that there are enough problematic factors involved in the whole raid and seizing of the property that will prevent it from ever having its stay in court. In the US, So we'll see. It's very possible. It does look like it was not the um not the smoothest raid I've ever seen, at least from a paperwork standpoint. So yeah, we'll have to wait and see if that if that's how it plays out.

But it's an interesting case, and it is somewhat worrisome because even if you were to say that the founder and owners of mega upload, we're all actively encouraging piracy, that reflects poorly on other file sharing services that may be very much dedicated to fighting piracy on their own service, but now they are brought into question because they just happen to have the same distribution model more or less

as Mecca Mega upload, and uh, that hurts everybody. So it's not you know, even if you think, oh, well, I never pirate stuff and I would never upload those kind of files to a service, it can still affect you it because it might mean that some other service that you use and you trust ends up getting caught in this blast and uh ends up not being able

to continue its services. It also raises another question. I know that there are a lot of people who had stuff up on Mega upload and now they don't have access to it, So there are people are saying, wait a minute, I owned the content that I put up on mega upload that belongs to me, and now I

can't get to it. Yeah. And and it's funny because the article in Wired ends with, um, the judge wanting to release information about the case to the media but wants all the media outlets to have that access at exactly the same time, and saying, Wow, if we just had a way to do that, and that would be something obviously that that's sort of an allusion to, Yes, you could do at was something like mega upload and um, yeah, I mean the it seems like the the apparently the

service had been used by a great many people to distribute content that they owned that it was perfectly legal to use the way they were using it. Um, so yeah,

I think, Um, it's interesting to see. I think the article sort of makes it sound like or or at least gives me the impression that this situation is sort of something of their own making because they made themselves appear to be up to something because it was fun to play that way that there may not there may not have been any attempt at anything impro improper, but people were using it improperly, and there wasn't you know, as much to discourage improper use as there could have

been perhaps, Um, So it's yeah, I think I think they they contributed to their own problems. Um. And its cases like this that give rise to propose pieces of legislation like the Stop Online Piracy Act that are both related to this. Yeah, so you've got, I mean, you've got these are other things that can affect all of us in a negative way. Uh, And we need to really think about it before, you know, allowing pro intellectual property owners to just run rampant over the legal system.

Now that being said, I still think that they deserve some sort of support system to protect their intellectual property. You know, I don't. I don't think it should be uh open season and that you can grab anything you want, anytime you want, with no care about, you know, purchasing it. Because if we were to all live that way, a lot of people would stop making content because there would be no reason to do it, you know. I mean, some people would make content because they love to create

things and they love to share it. But a lot of the content that we love, the stuff that everyone wants to get their hands on, would not exist. Because no one would make it because there's no money in it. So you know, there's there's definitely a complex issue here,

but uh, it's it's one of those things. Why the reason why I'm paying attention to the mega upload case is because I know this is the sort of thing that inspires various lobbies to petition, uh legislators to create laws that often go well beyond what the original intention of that law was meant to do. You know, it might the intention might be we need to protect these people or these companies because their property is getting stolen, but the actual implications go so far beyond it as

to well potentially cripple the Internet. So it's uh, you know, it's an interesting story. Um, we'll definitely keep our eyes on it and see how it develops and maybe, uh maybe mega will become an even bigger story than Mega upload ever was. Yeah, that's true. It's possible, especially with the encryption. So he's also gonna he's planning on a music streaming service as well. Yeah, so, I mean they had a music storage service already, so that doesn't really

surprise me. And they even had a video streaming service, so it's kind of a considering the popularity of music streaming over the last two years. That doesn't really surprise me. So we'll see how that all comes out and whether or not dot Com gets out of this one um or you know, maybe he ends up courting even more trouble in the future. He seems like the kind of personality who sort of thrives on this sort of thing to a point. I mean, no one thrives in having

seventeen million dollars worth of stuff taken from them. No, but he does like attention. Um. It seems like he would like attention for uh being a role model of sorts. Um. But uh, you know, I don't know that he wants to be seen as a uh I ruled breaker, maybe a real bender. And that's the story on mega upload, A controversial story if there ever was one. I hope

you guys enjoyed this classic episode of tech Stuff. If you would like to suggest future episodes, brand new ones, you can reach out to me the email addresses tech stuff at how stuff Works dot com, or you can reach out on Facebook or Twitter. The handle it both of those is tex Stuff h SW and you can pop on over to our website that's tech Stuff Podcast dot com there, we have an archive of all of

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