Kim Dotcom turned in file-sharing rivals while promoting piracy, feds say

The U.S. government has released a new batch of evidence against Kim Dotcom, the cagey founder of file-sharing site Megaupload who is fighting extradition from New Zealand, as part of its long-running copyright and conspiracy case.

In a 191-page document filed last week in Virginia federal court, the Justice Department cited emails and Skype transcripts to claim that Megaupload waged a quiet campaign against rivals by identifying them to investigators and working to cut them off from payment services.

As Wired reports, Megaupload cooperated with a criminal investigation in 2010 into a service called NinjaVideo, which was piggy-backing on Megaupload’s platform in order to offer its own movie and music download service.

Meanwhile, Dotcom also sent an email to PayPal in 2011 to say Megaupload was suing five other file-sharing companies —,,,, — and urged PayPal to cut off their accounts on the grounds they were committing copyright infringement.

Dotcom’s efforts to throw rival file-sharing services under the bus, if true, also coincided with a cynical attempt to portray Megaupload as clean when it came to copyright violations.

Specifically, Megaupload provided an “Abuse Tool” for copyright owners to remove their works from the service, but one that was effectively useless. According to a part of the Justice Department report (via WSJ):

The Abuse Tool allowed copyright holders to enter specific URL links to copyright-infringing content of which they were aware, and they were told by the Mega Conspiracy that the Mega Conspiracy’s systems would then remove, or disable access to, the offending material. The Mega Conspiracy’s Abuse Tool did not actually function as the copyright owners were led to believe, however, because the Abuse Tool only disabled the specific URL link identified, and the Abuse Tool failed to disable access to the underlying copyright-infringing material or remove the file from the server.

All of this led, in part, to the U.S. government’s controversial decision to raid and shutdown Megaupload in early 2012, a move that triggered hacking group Anonymous to launch an online retaliation campaign.

Since the raid, Dotcom has shrewdly manipulated media coverage to portray himself as the victim of American aggression as he fights the Justice Department’s effort to extradite him from New Zealand.

He apparently has the resources for a long legal fight. Prosecutors say Megaupload earned $25 million through advertising revenue, prosecutors said, and collected about $150 million from premium subscription fees.

Dotcom’s lawyer in San Francisco has described the case against his client as a “house of cards” but, if the allegations about Megaupload’s Abuse Tool are true, then Dotcom faces an uphill legal battle. This month, another “cyber-locker” site known as Hotfile agreed to shut down and pay a massive settlement to the entertainment industry.

Update: Ars Technica‘s Joe Mullin has a full rundown of the filing, including an explanation of Megauploads system for shoveling money to those who uploaded hit content.

Here’s the new Justice Department filing:

Megaupload evidence

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