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Inside the Secretive World of MegaUpload

Offshore accounts, companies in Hong Kong and Auckland, a mystery spokesman, multiple identities and an online goldmine. OWNI lifts the lid on the secretive file sharing platform which makes up 4% of the net.

by Benoit Le Corre On December 20, 2011

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As the US Congress works to pass the Stop Online Piracy Act (SOPA), which would create the power to permanently block file sharing platforms, one of the largest of those sites, MegaUpload, has ended its long public silence. The counter-attack began this month, when the streaming and download platform broadcast a video entitled The Mega Song in which major label music stars including P. Diddy, Will.i.am, Alicia Keys and Snoop Dog literally sing the praises of MegaUpload.

4% of the net

On MegaUpload, any user with an account can store a file and allow it to be downloaded by any other user. Over time, it has become a centre of audiovisual consumption on the net and an important landmark for file sharers. According to its promotional video, 50 million people come to MegaUpload every day. By itself it makes up 4% of the net.

The video is a sign of the changed times we live in. Abandoning the defensive posture it usually adopts when dealing with issues surrounding copyright, MegaUpload has switched to the attack. The company has gone as far as to file a complaint against Universal Music Group (UMG) for blocking access to The Mega Song on YouTube within a few minutes of the song’s release. Moreover, in an unprecedented PR effort two high-ranking representatives of the previously reticent platform appeared on the site Torrent Freak to denounce UMG.

After several attempts to contact those in charge of MegaUpload, OWNI was eventually able to speak with one of their representatives, “David”, who declined to provide his real name. According to David, MegaUpload represents just one of the many interests of MegaWorld. The latter is made up of thirteen developed portals, with two more currently in development, all carrying the prefix ‘Mega’.

This “global business”, as he calls it, generates a high level of profitability thanks to its advertising network MegaClick and its payment system MegaPay. Paying subscribers, prepared to fork out to accelerate the speed of their downloads on MegaUpload and MegaVideo, and advertisers constitute the principal source of MegaWorld’s income. Income they intend to increase with their next services MegaKey and MegaMovies. These will allow users to watch movies “in a legal way” by replacing their traditional advertising with ads provided by MegaClick.

Won ChaÏ district, Hong-Kong

But the picture painted by David is incomplete. While MegaWorld may represent the brand of the Mega sites, it is not the nerve centre. In reality, the management of the majority of Mega sites is carried out via the company MegaUpload Limited, located in the Won Chaï business district in Hong Kong. Founded in 2005, the company was likely set up there to capitalise on Hong Kong’s extremely flexible regulations for foreign companies, which include exemption from corporation and income taxes.

The WHOIS analysis of the fifteen domain names advertised on MegaWorld.com indicates that three other companies cohabit on the premises of MegaUpload Limited, Hong Kong. those are MegaVideo Limited, MegaMedia Limited and MegaRotic Limited. These four companies appear to make up the administrative face of MegaWorld.

The Hong Kong Register of Companies indicates that the founder of these four companies, Kim Tim Jim Vestor, registered three other companies in the Won Chaï district – Vestor Limited, N1 Limited and Mega PixLimited. The spokesman was unable to confirm whether or not they formed part of MegaWorld. Neither has he been able to put OWNI into contact with the mysterious Kim Tim Jim Vestor, real name Kim Schmitz.

Kim or Tim or Jim or…?

Last year, journalists from New Zealand’s Investigate Magazine looked into the identity of the mystery man at the centre of MegaUpload. Kim Schmitz is a former German computer hacker with something of a chequered past. He made a name for himself infiltrating some the best protected computer systems in the world (including NASA’s) and has been accused of getting rich on the back of fraudulent transactions and insider trading. In the early 2000’s, Kim Schmitz discovered Internet streaming. He created MegaUpload Limited in 2005 with a Finnish passport, presenting himself as Kim Tim Jim Vestor. Alternately using his German passport (where he is identified as Kim Schmitz) and his Finnish passport, he set up several companies – Kimpire and Kimvestor – in Asia following the Mega model. At the end of 2010 he relocated to New Zealand.

Schmitz acquired the most expensive house in New Zealand, a $30 million mansion near Auckland. In an interview with the New Zealand Herald, Schmitz revealed that he had legally changed his name to Kim Dotcom. He claimed to be one of the ten richest people in New Zealand, all while refusing to explain how he came by this fortune. Perhaps in order to bolster his claim, shortly afterwards he funded the most expensive fireworks display ever seen in Auckland. He also donated funds towards the victims of the Canterbury earthquake.

Auckland

But it didn’t take long for the philanthropist to take a back seat to the entrepreneur. On the New Zealand Register of Companies, two companies appear under the name “Kim Dotcom”: MegaStuff and MegaCar. The former Kim Schmitz created them in 2010 and 2011 before giving up his position as director and becoming the majority shareholder. All funds invested come, not surprisingly, from the Won Chaï district of Hong Kong.

Who’s in charge here?

In view of these findings, it would appear that Kim Schmitz is still holding the reins of MegaWorld. For their part the group claims to have as president a man named David Robb. The blogger behind Torrent Freak, a specialist in the subject, has interviewed him but clarified:

I did not know of him before this weekend.

In a case in the US that ended this summer, the judge identified Kim Schmitz as the real boss of the platform. The erotic publishing company Perfect 10 had filed a complaint against MegaUpload for infringement of copyright. According to the court documents, the person representing the defense was “Kim Schultz” (the Californian judge had misspelled his last name). OWNI contacted the infamous Norman Z from Perfect 10, about his complaint. He said: “Kim Schmitz loves Perfect 10 and would love to do business with us.” The case was ultimately settled out of court.


Image Credits: Hong-Kong Stuck In Customs [cc-byncsa] via Flickr, Auckland Sandy Austin [cc-bync] via Flickr; Screenshot Megaworld

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