Mega’s little problem with a pesky thing called the law

Kim Dotcom is blowing hard once again on Twitter.


He is going on about ‘his’ MegaChat…funny thing is he was crying poverty and said he had given all his shares in Mega to his estranged missus…so quite how it is his is another matter entirely. Perhaps he has misled another court?

In any case his boastfulness ignores a problem.

Chris Keall at NBR explains.

Mega has said it will abide by the laws of every company it operates in. As a registered commercial entity it can barely take any other stance.

And when the FBI so successfully eavesdropped on the Skype chats and instant messages Kim Dotcom and his co-defendants while investigating Megaupload, it did so with a warrant issued by a judge.

What would Mega do if a law enforcement agency in a country its service operates in (that is, anywhere), hands it, or one of its users, a lawful warrant asking for encryption keys? In NZ, it has to live under the Telecommunications (Interception Capability and Security) Act, aka TICS, which gives our government broad-brush powers to demand depcryption keys from a service provider when there is a (very broadly defined) threat to NZ’s national interest. This as-yet-untested legislation gives the ICT Minister discretion over who is defined as a service provider. Network operators like Spark, Vodafone, 2degrees are very clearly service providers. It’s more of a grey area for the likes of Microsoft Skype, Google Hangouts and now MegaChat – but I’m guessing the Crown won’t give MegaChat a free pass. ?

There’s also the wrinkle that the FBI did not have to serve Skype itself (the events took place before the service was bought by Microsoft); rather, the agency was apparently able to plant spyware on the defendant’s computers. If you’re listening in via snooping software on a person’s computer – or, heck, even a conventional bug planted in their living room – encryption won’t help.

It will only take one incident of law enforcement accessing a MegaChat conversation, or one country blocking the service (as Italy recently blocked Mega, albeit temporarily), to make it a whole lot more difficult for the new service to attract users.

With Mega now offering communications services they can easily be deemed a service provider now. That means that if requested…and you can bet they will be…they have to hand over to the authorities the decryption keys.

As soon as the authorities do that MegaChat is dead in the water and Dotcom’s claims will collapse like all this other claims. On top of that investors will begin to get very squeamish once they understand the risks that TICS poses to a business like Mega, the funny thing is Vikram Kumar knew this and talked about it often…perhaps that is one of the reasons that he got the arse card.

Basically it goes like this. If the authorities under warrant request using the TICS legislation the decryption keys and Mega fails to provide them…and word is they can’t, then the service will have to, by law, be shut down.

Now that to me doesn’t sound like a winning investment opportunity.

With Mega still willing to associate their brand with Kim Dotcom I don;t suppose pesky things like laws matter too much to them.