Mega slaps back – hard – at 'cyberlocker' accusations

Mega has released a report today to rebut allegations the data storage and encryption company is a “cyberlocker” platform that’s specifically designed to enable the mass infringement of copyright and to share illegal content.

The claims were made in September last year by UK-based online brand management agency NetNames in a report commissioned by the Digital Citizens Alliance, a US-based group backed by the Motion Picture Association of America.

Called "Behind the Cyberlocker Door: A report on how shadowy cyberlocker businesses use credit card companies to make millions," it levelled a number of allegations against Mega, over its business model and the extent to which it complies with relevant legal and regulatory requirements.

Those allegations ultimately resulted in political pressure being brought to bear on PayPal to sever its relationship with Mega, leaving the company without a method of processing online transactions.

Now Mega has returned fire with a report of its own, commissioned from Olswang LLP, a London-based international law firm that specialises in technology, media and telecoms issues and anti-piracy advice.

Olswang doesn’t mince words in its findings.

“The allegations in the NetNames report are highly defamatory of Mega and appear to have no factual basis whatsoever,” the report says.

“The NetNames report contains numerous factual inaccuracies and methodological errors and draws conclusions that are entirely wrong. In fact, Mega cannot be said to share a single one of the cyberlocker characteristics specified in the NetNames report.”

In a statement, Mega chief executive Graham Gaylard said the company is “now taking legal advice on this serious attack against Mega.”

Mega’s chief compliance officer, Stephen Hall, is under no illusions the new report is going to have an immediate effect.

“This is just part of long process of proving our credentials and being accepted as part of the normal business world,” he says.

“I wouldn’t bank on it causing any immediate change in [Pay-Pal et al’s] position but the parties we are working with will appreciate this confirmation of their assessment that we’re a legitimate business and they’re happy to work with us.”

Those parties are global payment processing companies that Mega is aiming to have handle its online transactions, though Mr Hall declines to name any of them at this point.

“We’ve signed up with some and are implementing solutions and we’re talking to others who are keen to do so,” he says. “The general strategy is to have a number of providers, rather than just one.”

The speed with which these online transaction solutions are rolled to the 200-plus countries in which Mega is used will be necessarily staggered, Mr Hall says.

“What’s appropriate for a credit card territory isn’t appropriate for one that lives on debit card or other online payment methods, and it varies quite widely in some parts of the world. So it will be customised for various territories.”

Pay-Pal, Visa and Mastercard only received a copy of Olswang’s report at the same time it was publicly released this afternoon and are therefore not yet in a position to comment on its findings.

RAW DATA: Mega Limited - analysis of the evidence relating to allegations in a netnames report on cyberlockers: Report on mega's business practices and legal & regulatory compliance policies (PDF here)