Mega, the encryption company that wants to be everything

Everyone has something to hide, Mega chief executive Stephen Hall says.  

“You want to hide your passwords, you don't want your bank account details known.”

Mega is the tech insider’s tech company. It has grown users by word of mouth, with a purposeful strategy of not seeking publicity.

Of course, Mega as it's now known, has had plenty of it.

A former iteration Megaupload, was famed, or infamous, for its larger-than-life founder Kim Dotcom and for building its success on what the US government says was large-scale pirating of copyright material, essentially a paying repository for ripped-off content, all hidden behind its signature encrypted cloud storage.

Mega, the new company, was launched in 2013. And this time around the company wouldn't pay for popular uploads —  depending on being a more traditional cloud storage service.

Privacy, or secrecy, depending on which way you view the world, is the nucleus of Mega’s business proposition. Where other tech companies, like video conferencing company Zoom, have grown a mass of users without a firm grasp on security or social networks where the users and their information are the product for sale, Mega’s tagline is: ‘the privacy company.’

Zoom hacks have become almost as ubiquitous as the technology itself. There was a time where competitor Apple’s iCloud storage system was seeing regular celebrity leaks after users had their private data accessed.

Hack-proof, but don't lose the keys

Mega allows users to have end-to-end encryption, from your device whether it’s a laptop or phone, through to its servers, to whoever you are communicating with. The idea is that not even Mega could check up on what you are doing or uploading, much less an outside agency. 

This also means you can’t just get an email to reset your password.

You hold the keys to your data: no helpdesk can save you from yourself.

That level of privacy clearly has appeal. Hall says the Kiwi company now has 195 million users. In March, when the covid lockdowns happened, user registrations jumped 60 percent almost overnight, Hall says.

Rival Dropbox has in the ballpark of 600 million and Apple's iCloud would be a magnitude bigger again - it's bundled and offered for free on each of its devices, including iPhone.

Mega has mobile options, android and iOS; it's translated into multiple languages and Hall can rattle off a grab-bag of impressive stats. Every second about 750 files are uploaded, every 10 seconds about 15 new people are signing up. 

And all this from a New Zealand base. Somewhat ironically, Mega's head office is in the Huawei building in central Auckland. Huawei of course is being shut out of new 5G mobile networks being built in the US, UK, Australia and Canada due to fears it will build in backdoors and allow wholesale spying for its alleged Chinese government masters.

Underneath the building, a new train station is being built. Co-founder Bram van der Kolk says Mega's 50-odd staff will be able to train straight to the office, although there is no-one there when I visit on a Friday. Most are working from home, says van der Kolk apologetically. 

Mega also has one data centre in NZ, which van der Kolk terms a “small vanity presence.” The bulk of its data centres are in Europe, although it managed to cut a deal to scoop up idle capacity at a decent price onshore, albeit still more expensive than it pays offshore. Van der Kolk says Mega wants to keep something here, because it’s a NZ company, ultimately.

Its six data centres are spread across Europe and Canada, with more than 20 staff in Spain and the rest spread out in ones and twos.

“We've got a special technology that actually really copies, or duplicates, or spreads your files over multiple data centres, so that if one goes down you can still get it from the others,” van der Kolk says.

On the question of ownership, the pair are less forthcoming. Hall says there's no single main shareholder.

“So, Mega, the New Zealand company, is owned by 18 shareholders through a holding company in Hong Kong.”

It has been widely reported that after Dotcom was sidelined, controversial Chinese investor William Yan, or Bill Liu, bought into the business. Dotcom in typical form called it a “hostile takeover.”

Companies Office records show its parent company is Hong Kong based Cloud Tech Services Limited.

Mega’s principals would very much like to leave behind Dotcom and his ongoing extradition battles and its links to Yan, who was charged with fraud in China and struck a deal over money laundering charges in NZ.

Before I am granted an interview with Hall and van der Kolk I am told we can’t discuss the ongoing extradition case van der Kolk too is still fighting over Megaupload’s alleged pirate past. Both quickly shut down questions about Dotcom. They have nothing to do with “the big guy” now. No meetings, no comment, nothing, Hall says. 

Dotcom and former wife Mona Dotcom still have a “tiny, tiny” holding in the NZ company, Mega Limited, and that “seems to be controlled by Mona,” Hall says.

But van der Kolk has taken aim at Dotcom online, tweeting “I tweet a lot of bulls**t and my lawyers have no client control”, in response to one of Dotcom’s inflammatory posts.

It’s no wonder they want to wish away Dotcom. The tech entrepreneur’s embarrassing electoral gambit where he buddied up with the Mana Party’s Hone Harawira came to a vainglorious end in the over-hyped Moment of Truth, held days before NZ’s 2014 general election.

We begged him not to do it, Hall says.

Van der Kolk is visibly annoyed. “There's this German term, fremdschamen, which there's no direct translation for ... But anyway, it's vicarious embarrassment. I won't comment any further.”

It's clear Dotcom was attempting to interrupt the legal proceedings against him by buying seats in Parliament; he also brought negative attention to Mega, too.

“Certainly, there was controversy around the big guy,” Hall says, “which we were wanting to leave behind and distance, and our attitude was really to just be a quiet performer, demonstrate our performance that we were reliable, compliant, and a fantastic product.”

Other than Dotcom, the other elephant always in the room with Mega is how it first made its mark. Copyright infringement.

Now, Hall says, it has good relationships with authorities around the world. It is "very diligent" on illegal activity.

“We have a support team of just over 12, and most of that, of course, is just helping people with operational queries, but they also handle any of those take-down requests. And on any cases of illegality we act within minutes, so law enforcement understands and recognises that we are incredibly compliant and supportive.”

He says people who do bad things tend to do it publicly. So they share or contact other bad people, which gets found by good people, who report it to Mega and Mega then acts.

“It's the same as in the copyright arena where it's the rights holders' obligation to find stuff that's been shared inappropriately and report it back, so that it's noticed and tagged down.”

Mega has grown without fanfare, he says. Mobile users are growing rapidly. It is now drilling into new markets. With the global lockdowns it offered free access to education providers. Next it wants to get small business to start protecting its data and communications too.

It has appointed a growth officer, although Hall points out it is “incredible to get to nearly 200 million users without spending on marketing.”

It's building new products for businesses both large and small. 

Hall doesn’t want to give much away but Zoom is clearly a target. 

The appeal is obvious: Zoom reported earlier this year it had hit 300 million "daily meeting participants." Microsoft's Teams, which also has a video call function, said it had 75 million active daily users, and 200 million active daily participants in one day, as more people work from home.

“We're looking very carefully around us what's happening with Zoom and all the security issues around that, and clearly, from the usability perspective, we've learned a few lessons there, so we're definitely working with that,” van der Kolk says.

Hall, the hype man, is quick to point out its chat product already “works fantastically on mobile.”

“It's fully encrypted. You can text, voice, video, I do it with my grandkids."

But the way it uses a cellphone to encrypt and decrypt several channels at once, it's limited a maximum of six users. 

"To scale like Zoom does with 50 or 500, or whatever number of people, needs a different design. It will come eventually,” Hall says.

Once that bottleneck is fixed, Mega will be able to scale out encrypted video calling “endlessly", says van der Kolk.

The company has also become profitable in the past 12 months - an important milestone although neither will give details on revenue. Hall says its shareholders have been "very, very supportive."

Shareholders raised US$30 million for the business "a while back" and hadn't needed or used all of it, so retained a reasonable capital buffer.

Eventually the idea is that instead of Slack, Zoom, Dropbox, Teams, people can just use Mega.

One cloud storage encryption company to rule them all.

Photos of the grandkids, Mega. Instant messaging at work. Mega. Secure video calls, Mega. Data in the cloud, why Mega, of course.