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tv   Studio 1.0  Bloomberg  May 15, 2015 7:00pm-7:31pm EDT

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emily: he is tech's biggest outlaw, under house arrest after a raid by new zealand. kim dotcom is known for his outrageous personality and has traveled the globe. from germany to hong kong to new zealand. now the target of the biggest copyright case in history, accused of trafficking pirated movies and tv shows as he awaits an extradition hearing to decide his fate. joining me on this special edition of "studio 1.0" from auckland, new zealand, megaupload founder and self-proclaimed ruler of the kimpire, kim dotcom.
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thanks for joining us it has been a year since you have spoken publically. you have been under house arrest. what are the rules now? where can't you go. kim: i am not allowed to leave the country. i have to report to the police twice a week. emily: you had your freedom until the raid. take me back to the day of the raid. kim: 72 cops, heavily armed with assault rifles, storming the property. some of them arriving in helicopters, some of them arriving with attack dogs. completely bizarre scene. my staff and i had to lie with their face the ground, guns pointed at them. my little kids crying because
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they were scared. my wife separated from the children. when they got to meet, they beat me up. the rest is history. emily: there is a description of you standing there with a sawed-off shotgun. kim: the police officer that made that story up in the press conference had to admit later in court that he made it up. i was sitting there, calm, with my hands in the air. emily: unarmed? kim: completely unarmed. emily: what did they take? kim: thousands of servers offline that hosted the data of millions of users. emily: most of your assets are frozen. kim: they are saying everything they seized belongs to the u.s. government. emily: would you call yourself broke now? kim: we recently had a judgment releasing $4.6 million for legal fees and living expenses. at the moment, if that judgment is not appealed, i am financially in a better position than i was a couple of weeks ago. emily: have you thought about moving to a cheaper place? kim: that would also mean -- it is kind of my last stand, fighting for my castle, for my home. i am trying to send a message and show them i am not going to fold over.
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i am going to fight back. emily: you are wanted by the u.s. government in the biggest copyright case in history for charges including racketeering, money laundering, wire fraud, copyright infringement. how much time in prison are you facing? kim: 88 years. emily: they say you owe $175 million. kim: they say that is the profit that megaupload made, and all of
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that should belong to hollywood. emily: yet, in this particular case, you have yet to be found guilty of anything. what is the myth of kim dotcom and what is the reality? kim: i am absolutely not legendary. i am who i am. i live my life the way i like. i do not limit myself or my thinking. when i have a plan, i see it through. emily: you were born kim schmitz in west germany. what kind of kid were you? kim: i was a naughty kid. my mother, i am so sorry. i was a bad kid. once i had my first computer, everything changed for me. i started questioning everything. why go to school? this is the future. this is what i want to do emily: how did you become a hacker? kim: when i was in my teens and had my first modem, i was so excited to be able to chat with people halfway around the globe that share the same interests, hacking. it was exciting to go into computer systems and find out things you are not supposed to see.
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bit of an adventure. emily: you said you hacked the pentagon, citibank, nasa. obtained secret documents on saddam hussein, tracked down osama bin laden's bank accounts. kim: back in the day after 9/11, that really affected me. i felt deeply unhappy about that. i was trying to do something, be part of the effort to stop people from ever doing that again. emily: you did all those things? kim: i did not do myself. there were other things i did. emily: some people would say there is no proof. kim: there is no proof. emily: when and why did you change your name to kim dotcom? kim: i bought the domain, i thought it would be great if my name were kim dotcom so if anyone wants to know anything about me, i do not have to hand them a business card. they can just go to my website. it is all there. emily: take me back to the start of megaupload.
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kim: i was a street racer. i always made great videos, shared them in the street racing community, on the forums. the file sizes kept getting bigger, and you could not large files over e-mail. i wanted to solve that problem by creating a server where you can upload a file, get a unique link, and e-mail a link to the people you know. it is a convenient solution to a problem that is still relevant today. emily: how quickly did it grow? kim: instantly. it was massive. within weeks, we had to buy additional hardware, additional servers. not a single penny spent on advertising. it got its own life. emily: at its peak, 50 million daily users, billions of files. 48,000 file transfers a minute. is that about right?
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4% of internet traffic. kim: that's right. emily: in its prime, how much megaupload content was legitimate and how much was pirated? kim: the vast majority was completely legitimate. there is no difference between megaupload and services like dropbox or mega today. you can use it for good things or bad things. you can buy a knife and stab someone in the heart or use it to slice your bread. you are not going to throw a knife maker in jail because someone is murdering someone with a knife. emily: copyright holders say you robbed them of millions of dollars. kim: how can i have done that if i, myself, have never uploaded a single copyright file and shared it? emily: did you try hard enough to stop it? kim: when we got copyright notices, we took them down. we gave over 150 copyright holders direct access to our
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servers to delete links they did not like, that were infringing on their copyright. emily: you had a rewards program. you paid users to upload content. they made more money the more popular their content was. what is popular? movies that have not been released, music that is free. in that case, weren't you complicit? kim: i do not think so. if you look at our rewards rule right there on the front page, it said you cannot upload stuff that does not belong to you. we limited the rewards program to files smaller than 500 megabytes. you upload a rip of a movie, you do not make a penny. emily: do you believe in copyright? kim: i do not believe in copyright extremism.
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extremism is if you are a hollywood studio, and you release your content in one country first and roll it out over a couple of months in other countries around the world and expect the internet community in all these different countries to wait for the release. they have just launched netflix in new zealand. the catalog of content you can download is roughly 10% of what they offer in the united states. that is completely unfair. because people do not get that access, they are looking for the stuff elsewhere. it is a problem created by the content creator. i am not responsible for that. if they had an offering that had all content globally available for a fair price on any device, piracy would shrink into insignificance. emily: if it is illegal and you are not trying hard enough to take it down or do not take it down, doesn't that mean what you
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are doing is illegal? kim: i have tried everything. we were a small company in hong kong. we did not catch up with the latest technologies. we were not given an opportunity to do that. emily: do you think the artist who makes the song, tv show, movie, videogame creators -- do those people deserve to be paid? kim: absolutely. emily: if those people deserve to be paid but people are accessing the content illegally, how do you find a balance? kim: where is the problem? i do not see artists starving. emily: does that mean it is fair that others should access their content illegally? kim: i do not think that is what i am trying to say. everyone should look at it realistically. these hollywood moguls are living in mansions bigger than mine. it is greed dominating this
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debate. it is not like anyone is starving. the movie industry makes more money year after year. society wants to have access to the content, but hollywood does not make it available. i am a tiny piece in the middle of that. i am not responsible for that. emily: do you think the government is trying to make an example out of you? kim: absolutely. emily: president obama is saying the innovation and creativity and stuff the american people create is our biggest asset. why should we allow it to be stolen? kim: that argument does not include the question, why don't we make this great product available to everyone in an easy format? if hollywood had some smart people working for them, they would probably have the biggest internet company on the planet. emily: explain how this great
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internet company out of hollywood would work. kim: it is simple. if you have a content platform owned by all these different studios combined, and they make their content available at a fixed monthly fee for everyone to access around the world, they would have the biggest internet success in history. i can understand the dilemma, but to make me responsible is outrageous. emily: what is your message for president obama? kim: it would have been nice if he delivered the change. it would have been nice if he did not spy on the world population. i'm disappointed in his presidency and in the u.s. government for the way they are behaving around the world. this case is a small example of how arrogant the u.s. government has become around the world. emily: tell me about your
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relationship with edward snowden. ♪ emily: you were arrested for
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the first time when you were 18. you were convicted of insider trading. why should we trust you? many people think you are the world's biggest tyrant. a white-collar criminal. kim: i am an easy target. when i was a young man, i made some mistakes. but i never hurt anyone. i hacked into systems because i was an adventurer. i wanted to find out if aliens exist. i have grown. i am a family man. i have five kids. i am not a criminal. emily: what is this new business you are working on? kim: after the raid, i spent a lot of time thinking about the intrusion of privacy. in my case, they have used the nsa to spy on me. the prime minister of new zealand has apologized to me.
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i created a cloud storage website where people can be 100% sure their data is fully encrypted, that no government can access it. that we, as a service provider, cannot access private data. emily: you cannot see what is in the files? so the nsa could not get it. kim: they would get a lot of garbage. emily: what is to stop this from becoming a bank for criminals? kim: it is your right to privacy. i think that right overrules anything else. emily: is there anything you would have done differently? kim: if anyone from the u.s. government had reached out to us and said, we have a problem here. we never got any warning like that. emily: tell me about your relationship with edward snowden. kim: i think he is a hero. i admire his courage. he will be remembered in history as one of the great people of our time.
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emily: what is he up to? kim: he is happy, he is fine. he is in russia. i think he is pleased that the debate has been triggered based on the things he has done. especially to americans. emily: when it comes to china, iran, islamic terrorists, the u.s. government, what are you most worried about when it comes to spying, hacking? kim: i am worried about the situation in ukraine. i think putin is someone i would be very careful with. i think that obama has done a good thing in negotiating with iran, trying to find a resolution to the nuclear standoff. emily: what about other countries? north korea and sony? should we be concerned about north korea? kim: you do not really believe that north korea hit sony. i do not believe that for a
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minute. emily: who did that? kim: some sophisticated group that has an interest in what hollywood is doing. emily: you do not think it is a group with ties to north korea? kim: i do not think so. i do not think north korea has the capability. it is a beautiful story for the u.s. government to put this on north korea. it is more likely it was an insider at sony that was disgruntled. emily: i know you're worried about microsoft. kim: obviously, windows software is the most interesting target for the u.s. government because everyone is using it. if you can just use windows update to install a backdoor on some target, you know, that is the most convenient way to get access to everything that happens on an individual's computer or on government computers or bank computers.
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it is just the logical extension of what they have already done. emily: you say julian assange will be hillary's worst nightmare? quickly think so. >> i think so. ♪
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emily: what about julian assange? what is your relationship? kim: what julian assange is doing is putting spotlights on secrets. emily: how often do you talk to him? kim: why is that important to you? emily: i am curious. kim: i like these guys. i look up to them. they are brave. they are going through a hard time. they chose to do that for the betterment of all of us. i love to talk to them. emily: you said you would bring the internet party to the u.s. in 2016. why? what is your goal? kim: i think there is a big group of people out there that disagree with what is going on, you know? they want to have their privacy
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back. they want to have internet freedom. emily: you tweeted that you would be hillary's worst nightmare in 2016. how so? kim: i have to say it is probably more julian. but i am aware of some of the things that are going to be roadblocks for her. if i can provide some transparency with these people and make them part of what the internet party stands for, i will be happy to do that. emily: you say julian assange will be hillary's worst nightmare. how so? kim: he has access to information. emily: what information? kim: i do not know the specifics. emily: why hillary in particular? kim: hillary hates julian. she is an adversary of internet freedom. emily: she signed your extradition request. so you have a bone to pick.
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kim: i actually like hillary. i like obama. it is crazy that all of this happened. emily: the internet party has not worked out in new zealand, as i understand it. it has been something of a flop. how do you resurrect that? kim: a lot of times, when i created something new, it was a bit ahead of its time. i think a political party is something that grows over time. emily: if you are not extradited, what is next? kim: i think the case will go on for a long time. i have prepared myself for that mentally. emily: what do you want your legacy to be? kim: i am working on something new that i am really excited about called meganet, an alternative internet. i want to create a new internet that gives people power over the network rather than governments and corporations.
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emily: people have the power rather than companies? kim: the way meganet works, it turns every mobile device into a router-server and allows devices to communicate with each other to create a network that still utilizes the internet as a pipe, but fully encrypted. it is an internet completely run by the people, for the people, with all the capacity on your mobile device carrying the network. emily: how do you want to be remembered? kim: at the end, i want my children to look back at whatever there is to learn about me and be proud of me. emily: think they will be? kim: yes. emily: kim dotcom, thank you for joining us. it has been a fascinating conversation. thank you. ♪
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emily: carl icahn gives lyft a $100 million lift, but is it enough to help the company catch up to uber? i am emily chang, and this is "bloomberg west." coming up, netflix may be teaming up with jack ma. we look at the company will the plan to expand in china. plus, google's self driving cars are about to hit the streets. and one of the highest profile vc firms run by women is getting ready to raise its funds. first, to our top story -- carl ah


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