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Google screws Mega (UPDATED with Mega CEO response)

Last week, Google said it was adding encryption to its Drive online storage and file sharing service.

On the face of things, it looked like bad news for Kim Dotcom's startup Mega, which will reverse-list on the NZX in August.

I don't think the US giant was particularly targeting Mega. Rather, Google's looking for an advantage over the likes of Dropbox, Microsoft, Apple and others as the online storage war heats up.

Nevertheless, encryption has been the key point of difference for Mega in the crowded online file storage market.

Google is only offering encryption for those who pay from $US10 a user per month for Drive.

Mega offes encryption to all-comers, including those on its freebie plans (that is, those up to 50GB). But then again, Mega's investors will be focused on the folks who pay.

I asked Mega chief executive Stephen Hall for comment. After mulling things over for several days (and waiting in vain for more info from Google), he's now replied.

His key point is that Mega puts the user in control of encryption. Only the user has the power to decrypt files (one downside of security lockdown around this arrangement is that if you forget your password to Mega, you're stuffed. You can't request a reset). 

Hall's complete reply:

Google still hasn’t provided any details of its ‘encryption in transit’ for Drive, although it does talk about it in relation to Gmail where it refers just to TLS [transport layer security].

All we know right now is that:

  • Google uses SSL as encryption technology;
  • SSL is a very common technology used by most cloud providers to establish an encrypted connection between a server and a client;
  • SSL has nothing to do with Mega’s User Controlled Encryption, which encrypts data before it is being uploaded - via an encrypted SSL connection – to the Mega platform.

With Mega’s encryption the user controls the keys. Neither Mega nor any other external party can decrypt the encrypted files.

Mega will also be watching nervously that Google is now offering Drive users unlimited online storage for $US10 a month, while Microsoft is offering Office 365 subscribers a terabyte, which they can use for any purpose as long as they've paid their 365 sub (it costs from $6.40 a month).

Google screws Mega

June 26 The cloud storage war just got even more intense.

At its I/O conference in San Francisco, Google launched Google Drive for Work, which offers unlimited online storage for $US10 a user per month (the company has one global rate, charged in US dollars).

It's more evidence – as if any were needed – that it's becoming near-impossible for local players to compete in commodity cloud services.

Online storage and file sharing specialists like Box, Dropbox and Mega will also be feeling the heat.

Google says the Drive upgrade, available from today, also includes advanced audit reporting and new security controls.

The announcement comes on the heels of Microsoft supersizing OneDrive online storage for Office 365 users to 1 terabyte (1024GB), which can be used for any purpose. Office 365 costs from $6.40 a month.

Apple also recently announced a series of capacity upgrades and price reductions for iCloud, including 200GB for $US0.99 per month. The new plans will launch in the New Zealand spring.

Google says as well as offering unlimited storage, Drive now supports individual files of up to 5TB in size (even though most PCs today are sold with hard drives a fifth that capacity, or less).

And Google also steals the key point of difference for Kim Dotcom's Mega. As of today, all files uploaded to Google Drive will be encrypted, not only from your device to Google and in transit between Google data centers, but also at rest on Google servers, the company says.

NBR has asked Mega for comment [UPDATE: Chief executive Stephen Hall says Mega has no comment until it sees more details.] The Auckland-based online storage company, which offers 50GB free before its charges kick in, has to be watching the online storage price and feature war between the multinationals nervously as it prepares for its controversial reverse listing on the NZX in August.

Google isn't specifically targeting Mega. Dropbox, Microsoft and Apple's online storage efforts loom far larger on its radar. 

Nevertheless, the company's move to embrace encyption and offer business users unlimited storage, will put the squeeze on Kim Dotcom's startup (which has not so far disclosed paid user numbers, or any financials).

One solace for Mega: encryption and other new security options are only being offered Drive users who shell out $US10 a month. In the freebie space, Mega will still be able to claim encryption as a unique point of difference – although of course over time its investors will want to see more subscribers move on to paying plans.

Google also has Microsoft in its guns this morning. 

Some of the most common file types stored in Drive are Microsoft Word, Excel and PowerPoint files, the comany says, "We’ve now built the power of Quickoffice into Docs, Sheets and Slides, so you can open and edit those documents in their native format Office Compatibility Mode directly on Android and Chrome browser today, and coming soon to iOS. No need to buy additional software or decide how to open your file. Editing Office files is just a click or tap away from Drive on your computer, tablet or phone."

Google also used I/O to preview Android L, a new operating system for phone, car, tablet and TV; Material Design, a development initiative to give Google's products visual consistency across the Web and Android, and Android smartwatches from Motorola and LG.

Check out The Verge's roundup of major announcements here.

Watch the I/O livestream here.

More by Chris Keall

Comments and questions

Game over.

Don't count the game over yet. Some people just don't want to put all their data with the one big global player. Remember Whatsapp v's Facebook - people went What'sApp because they did not want Another Facebook app. The same is likely to happen here.

Dotcom will say Google and other multi-nationals are in bed with the US govt. And a few thousand people will buy that line and support Mega.

But overall, the commoditisation of the online storage and file sharing market means a tough road for Dotcom’s startup.

It’s hard to see him signing tens up tens of millions of customers as he did with Megaupload, which was a trailblazer in its time.

Google says Drive, which launched two years ago, now has 190 million users.
It’s impossible to compete with that sort of scale on price. Now that Google’s adding encryption, too, it’ll be even tougher for Mega.

And of course Dropbox and others are pushing ahead with better desktop and mobile synching (where Mega was slow off the mark), and features like multi-user business accounts. Big spending by rivals will be required to keep up.

I wonder if there would have been a $3.25m donation to the Internet Party if this development came out a month earlier...

This is fantastic. Not only it is game over for dotcom and all the big boys, those NZ cloud providers could be in trouble as well.

I forsee trouble ahead for all those local storage space providers. All we need next is to have Google version of AWS and you can kiss all the data centres here goodbye.

The writing has long been on the wall that Google, Microsoft, Amazon Web Services (AWS) and other multinationals will dominate on price.

But locals like Datacom and Telecom can still offer hand-holding service for NZ companies that don't have the inhouse expertise to manage hosted services with the likes of AWS. And many NZ ICT services companies have a foot in both camps, offering a mix of local services and/or hosting and access to the big global services for commodity stuff.

Data sovereignty issues also remain a factor for a number of corporates, and government departments, which plays into the hands of local providers.

CK, you know as well as I do, that 80% of the NZ businesses are SMEs and on average around 10 staff or lessf. So, you are talking about the 20% of the market that they are big enough for Telecom and Datacom. Out of that 20%, 5% will be the big boys like the banks, or government sector and big firms and they either have their own ICT process or they have already signed up with Datacom, Telecom and other large telcos.

Using your data sovereignity argument, that means, the data centre built by IBM, HP and Gen-i/Revera, are for the 20% of the market?

Maybe Google is after the 80% of the market?

Telecom just bought AppServ, which targets the small-to-medium business market, and Datacom scales down to small business as do many of the other big boys.  It's the way of the world in NZ, where our definition of a big business (500 seats) would be labelled small business in the US.

Yes, the data sovereignty argument only applies to roughly 20% of organisations by number, but of course they are by far the biggest spenders.

Cheers for this article. Just subscribed for the 1 TB plan and busy using it to back up my 100GB of Drop box...

Would hate to lose my files, so now with two online providers and various local copies should be pretty right....

LOL. ROFL. LMAO. If this was true, it would mean that Google killed the search market... but search is still up for grabs as a niche - think Wolfram Alpha, DuckDuckGo, Pinterest, Delicious, Kayak, AirBNB, Youtube etc. The irony is, that NBR is case in point that niche can succeed on the internet with a unique offering and business model.

You sound a bit upset there buddy...Google hasn't killed the search engine market.

It completely slaughtered it and devoured it.