Dubbed the world's most wanted internet pirate by the FBI, Kim Dotcom was at home in his New Zealand mansion preparing for a birthday party when a police helicopter swooped last week.
"It was definitely not as simple as knocking on the front door," observed one officer at the scene. Police had to hack through a series of electronic locks activated by the flamboyant German entrepreneur, before storming a fortified safe room where they found Dotcom 6ft 7in tall and 130kg huddled with a sawn-off shotgun that he wisely avoided using. He spent his 38th birthday in an Auckland jail.
The timing of "Dr Evil's" arrest, during a week when the debate about online piracy reached "fever pitch" in the US (see below), was striking, says the Daily Mail. Dotcom's detention, and the forced shutdown of his global file-sharing empire, Megaupload, only fanned the flames.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Megaupload is a "cyberlocker": a site where users can upload and distribute files. But prosecutors allege that most of the content music, films, TV shows and games is in violation of copyright.
In its short life, Megaupload garnered 150 million registered users and generated 4% of all internet traffic. That translated into a $175m bonanza for Dotcom and his associates, who now face US extradition for allegedly causing $500m "in economic harm", as well as money-laundering and racketeering. Megaupload dismisses the charges as "grossly overblown".
Born Kim Schmitz in Kiel, north Germany, he made his first profits copying computer games to sell to friends and, in 1998, was convicted of computer hacking.
Dotcom has never hidden his "controversial past as a cyber-raider", observes The Sydney Morning Herald. In fact, he revels in it. Dotcom once boasted he would become one of the world's richest men, because "I'm smarter than Bill Gates". Among the personalised number plates on some 20 vehicles seized last week (including a Rolls-Royce and pink Cadillac) were: HACKER, STONED, GUILTY, MAFIA, GOD and POLICE.
After his initial brush with the law, Schmitz seemed to go straight: launching a computer security and investment business that funded an extravagant lifestyle on the German celebrity circuit. But in 2002, he fled to Thailand after being charged with ramping internet shares.
Deported back to his homeland, he served 20 months probation for what was then "the largest insider-trading case in German history". Schmitz then disappeared, resurfacing in New Zealand two years ago, having launched Megaupload and changed his name to Dotcom.
"I have a different attitude towards money than those who would rather hoard it," he told a TV interviewer. "I would rather spend it and have a lot of fun." True to his word, Dotcom recently treated his New Zealand hosts by staging a massive New Year's Eve fireworks display.
Last year, Dotcom told the New Zealand Herald he was looking forward to life in a "rare paradise on earth" with his wife and three children. It looks like a case of paradise postponed.
The "angry debate" over internet freedom
Kim Dotcom thought New Zealand was "under the radar, away from Interpol", internet security expert Jeffrey Carr told the Daily Mail. He obviously "wasn't aware how closely the FBI has been building its international relationships over the past few years". His arrest marks a dramatic escalation of the American Justice Department's global battle against copyright piracy.
"If Dotcom, the comic-strip evil copyright pirate, hadn't already existed, Hollywood would have been forced to make him up," tweeted the FT's John Gapper last week.
It seems no coincidence that his arrest came amid "an angry debate in Washington about whether piracy matters". It looked like a foregone conclusion that Congress would pass tough new laws, championed by the "Big Content" giants of Hollywood and the music industry.
But support for the Stop Online Piracy Act (Sopa) and the Protect Intelligence Property Act (Pipa) was eroded by a campaign led by Google and Wikipedia, who branded the bills "a danger to internet freedom" and staged a series of black-outs and shutdowns in protest. On Friday, American politicians delivered them "a stunning victory" by voting to delay the legislation.
Dotcom's arrest sparked a furious response from hacking group Anonymous, who retaliated with their "largest attack ever on government and music industry sites".
How convenient for those "spoiling for a fight after the apparent defeat of Sopa/Pipa", says Molly Wood on CNET. If revelations about Dotcom don't intensify pressure for new laws, then these attacks will. The hackers may well have "been played" by the authorities. "What better way to bolster the cause of cyber-crackdown than by pointing to a massive display" of hacking at the hands of "everyone's favourite internet bogeyman: Anonymous"?
-
FTSE 100 hits record highs – why is it rising and will we see more gains?Advice UK equities have been described as unloved for a long time but as the FTSE 100 hits new highs, we explain if now is the time to buy British.
-
How to invest in copperIt may be time to invest in copper as the red metal appears poised for a big jump. Dominic Frisby looks at what should investors should buy
