There's been near nuclear fallout from federal prosecutors shuttering of Megaupload, the file-sharing service accused of costing the entertainment industry $500 million in lost revenues. It's estimated that shutting down Megaupload's family of websites, which are accused of hosting massive amounts of copyrighted files, affected 1% of all Internet traffic. The feds are seeking the forfeiture of $175 million from Megaupload's flamboyant founder, Kim Dotcom; sympathetic hacker coalition Anonymous has since launched online attacks against the RIAA, MPAA, and Justice Department; and file-sharing and cloud services from FileSonic to Dropbox are wondering what this could mean for the industry.
On Tuesday, we caught up with RapidShare attorney and spokesman Daniel Raimer. RapidShare is one of the world's most popular file-hosting sites, and many have wondered whether the site could be next on the feds' list of targets. In part one of our two-part interview, Raimer explains why if RapidShare is shut down like Megaupload, then Apple's iCloud, Microsoft's SkyDrive, Google's YouTube, and Dropbox deserve the same fate too.
FAST COMPANY: Do you think Megaupload was fairly or unfairly targeted?
DANIEL RAIMER: I guess that's up to a jury to decide. I'm not a judge, and I don't want to make any verdict. I've seen doing Megaupload doing things that we wouldn't do, and that we strongly discourage, such as their heavy rewards program. But I don't want to say that they're guilty. It's not up to us to decide that.
Do you think federal prosecutors will target RapidShare next?
I don't think so.
Let me put it like this. The technology behind Megaupload and RapidShare may be similar, but this is also true for the technology of Microsoft's SkyDrive or Apple's iCloud, which is not too different from what RapidShare is. It's uploading a file, and accessing it over the Internet, or even sharing at certain times with friends. The business from an ethical standpoint is really similar. The main difference is, what exactly is your business model? Are you aiding piracy? Is your intent to make money by attracting pirates and getting attention from copyright pirates? Or do you want to have serious customers and long-time relationships with satisfied people from all over the world, who trust you? That's exactly what we do.
It's a more challenging job because you have to heave good support teams, you have to be innovative, and you have to have a good user interface. Just aiming for piracy is probably cheaper and more effective in the short term, but RapidShare is definitely aiming for legitimate use, and we have been very strict and effective on cracking down on piracy, and scaring pirates away from our system.
You've compared RapidShare to Apple and Microsoft. In a statement RapidShare released this week, the company compared itself to Dropbox and YouTube. Is there a push to imply that RapidShare's business model is just as legitimate as Google's, Apple's, Microsoft's, and Dropbox's?
If RapidShare is shut down like Megaupload, then do you think Dropbox, Apple's iCloud, Microsoft's Skydrive, and other similar services ought to be shut down as well?
Yes. Right now, no one can tell me Dropbox is doing more against piracy than we are. I would go so far as to say that we are really spearheading the industry's effort to catch up with piracy. We were the first ones to implement a repeat-infringement policy. We were the first ones to develop crawling software that is proactively searching the Internet for illegal content on our system. A third of our whole company is dedicated to taking down illegal content. Our response to takedown notices is probably less than an hour during our regular business hours. We really do a lot, and I really believe that others aren't doing half of what we are doing.
I also believe popularity among pirates on these services isn't really that big because people are afraid that Apple knows too much about them, so they don't want to use their iCloud service for non-legitimate purposes. Dropbox has other restraints and slower speeds. On top of that, RapidShare has been the No. 1 file-hosting service since 2005 or 2006, so they've known us for quite a long time. So this is probably why we're facing more illegal content than others. But at the same time, we're more proactive than others.
In the U.S., Apple and Microsoft are seen as large, important, and legitimate companies, whereas Megaupload and RapidShare are foreign entities, in many respects, that do not have strong brands here and are not considered job creators. Do you think this is why Megaupload might be targeted, because it's not a company like Apple?
I can't really comment on that. First off, I don't want to accuse federal prosecutors of being racist, because that's probably not true. But we've never really had any problems with law enforcement in the U.S. I would be surprised if we were to get in trouble. We've always gotten along with officials well. With regard to Megaupload, I think them being located in the New Zealand had nothing to do with the raid. They would've had the same problems if they were based in the U.S.
The RIAA and Congressional members of the International Anti-piracy Caucus have claimed that RapidShare was "overwhelmingly used for the global exchange of illegal movies, music and other copyrighted works."
Why did you read the 2010 report, and not the 2011 one? Because they didn't repeat that after we explained ourselves to them. In last year's publication we were not listed anymore.
How did you change their opinion?
We thought that they were probably wrongly educated, and we didn't know where these quotes were coming from. So we went to Washington, hired a lobbying firm, and explained it to them, and asked, "Hey, why do you think that about us?" We never really got a lot of answers out of them. "Well, we took a lot of factors into consideration. It's so complex that we can't really describe it to you," they said. This wasn't really a good explanation to us. Fortunately, the next report didn't list our name anymore.
Why was Rapidshare.de shut down?
It was a different service that the inventor of RapidShare started because he became incorporated. He started with Rapidshare.de, and it started to get bigger so he decided to start a company, which is RapidShare AG, which is based in Switzerland. After a while the Rapidshare.com service had become much more popular than Rapidshare.de. So he decided to sell his old service to the company, and they then shut it down because it didn't have enough users anymore.
And that had nothing to do with court injunctions or copyrighted content?
No. It was just that the service was pretty old, and everyone was using Rapidshare.com at that point.
Do you check uploaded files against pirated content?
Yes and no. We have a very strict filter that recognizes content that is 100% identical to content that has already been taken down. So a file that is uploaded has to be the exact same file up to a single bit. It cannot be different, even by one bit. If it's different, the filter will not recognize it. So, yes, we do have such a filter, but it's not the type of filter that the content industry is asking for. They're asking for filters such as the ones used for YouTube, where software tries to recognize a certain movie by certain characteristics. Our filter works differently.
There are RapidShare search engines devoted to helping users find links on forums and websites to pirated content on RapidShare. Do you try to stop them?
We do quite a lot. We have filed more than 50 lawsuits in order to shut these websites down. We have been pretty effective doing that. Out of those 50 cases, I would say we've won roughly 45 of them. The problem is that legal actions are tough. We have to prove their are trademark infringement. What we do right now is try to prove these websites are infringing with the help of some software we've developed ourselves to gather information on the content that is published on these systems. So right now, we're taking a software approach, too.
Do you have any connections to Kim Dotcom?
No, I have never talked to him. I've never met him. I have never sent an email to him. I can't speak for the whole company, but I've never had any ties to him. I've seen the guy in German television before he was doing Megaupload because he was notorious in Germany. But I don't have any personal relationship with him, or even talk with him.
[Image: Flickr User John O'Nolan]