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Aspiring politician Kim Dotcom exports jobs

The entrepreneurial Kim Dotcom is, of course, free to register his companies where ever he pleases, and to outsource work to whatever he finds the most cost-effective or efficient destination.

LATEST: Why donate $50K to John Banks in the first place? Dotcom camp explains

But these days, Dotcom's not just a business man, he's an aspiring politician.

The giant German says he'll use January 20, 2014 (the second anniversary of the raid on his mansion) to launch a new political party - and that he may even stand for the Beehive himself.

Word to the wise, Kim - if you're going to put yourself in front of NZ voters, don't send NZ jobs offshore.

I see that interview with Wired (hat tip: Dubdotdash), Dotcom says his new music service is being created by a team of 22 developers in Portugal.

Sure there's an IT skills shortage in NZ. But many local dev shops would jump at an opportunity like this. And regardless, a lot of NZ companies are addressing the tech staff shortage by importing personnel, not exporting jobs.

And this comes on top of NBR's earlier revelation (below) that for all of his talking-up NZ, Dotcom has placed ownership control of his new music service with his Hong Kong companies.

Dotcom tells Wired the service - now renamed from Megabox to Baboom, will launch in January 2014 (it was originally scheduled for June this year).

Wired discusses Baboom's ad-substitution, which will let subscribers get free music - up to 10 albums a year, Dotcom estimates - if they accept a web browser plug in that replaces ads served up by regular websites with those served by Dotcom's own ad network.

Few will cry any tears for Google or Facebook losing a little ad revenue to Baboom's ad substitution software, but it's a tougher sell if you also take ad revenue from struggling smaller website publishers. Dotcom says he won't, but has yet to detail how this would work in practice. 

ckeall@nbr.co.nz


Dotcom - Why I chose Hong Kong over NZ for new Megabox service

March 13, 2013: NBR recently stumbled on the fact that while Kim Dotcom talked up New Zealand at the Mega launch, he has placed his coming Megabox music service under control of one of his Hong Kong-registered companies. Another project, Megamovie, will also be controlled by one of his Hong Kong companies. (see below).

NBR Online asked Mr Dotcom why he put one of his Hong Kong companies in charge of Megabox.

"It involves some US artists as potential shareholders and they want a more tax-friendly jurisdiction. That's why we looked at Hong Kong and Singapore," he replied.

But a source familiar with international tax law told NBR there would be no particular advantage for the US artists if they were shareholders in a Hong Kong-based company controlling Megabox. They would still be subject to US tax.

The Hong Kong setup could potentially benefit Mr Dotcom's own tax and privacy situation, however.

Mr Dotcom confirmed that "Vikram [Mega CEO Vikram Kumar] is not involved in Megabox and Mega NZ has nothing to do with it."

At the January 20 Mega launch in Auckland, Mr Dotcom said Mega would follow six months later. 

He told NBR he would talk further before the Megabox launch, had no further comment at this time. Anything media writes about the services is "pure speculation" at this point, he added.

The Hong Kong Integrated Companies Registry lists four active companies associated with Mr Dotcom: Kimpire, Trendax, Data Protect, Kimvestor and Megaupload.


Mega IPO chat reveals Hong Kong twist

March 7: Kim Dotcom talked up an NZX listing when his new file sharing service, Mega, was launched on January 20, and constantly underlines that his new company was based in New Zealand and registered here.

IPO talk as been further stoked by an ad for a CFO experienced in taking companies public.

While talking to Mega CEO Vikram Kumar about the CFO role, NBR also asked for an update on Megabox and Megakey - two key projects Mr Dotcom said would launch six months after Mega.

Surprisingly, the Mega CEO said he did not know. He was out of the loop.

Megabox and Megakey fall under a company listed in Hong Kong, Mr Kumar said - a detail not mentioned by Mr Dotcom at the Mega launch, which was heavy on references to his desire to build his business from a New Zealand base.

Further queries on the services were referred to Mr Dotcom. NBR awaits comment.

On the eve of the Mega launch, Mr Dotcom talked up Megabox as a major initiative. It will sell music on an iTunes-style model, he told NBR ONLINE, but will also offer free content if users racked up credit by installing a Megakey app that subsituted ads as they surfed the web.

After an outcry from publishers and privacy advocates, Mr Dotcocom clarified Megakey would only replace ads served up by the world's 100 largest sites, although no detail was offered on how this would be achieved, or whether it would include the ads served to many smaller sites which are Google Ad Words partners.

Megabox will be followed by a second service, Megamovie.

NBR asked if this movie download service would also fall outside the orbit of IPO candiate Mega.

"Megamovie is still at concept stage but, yes, is the responsibility of the Hong Kong entity," Mr Kumar replied.

More than one Hong Kong company is involved, he said.

A Wired profile details how Mr Dotcom moved to Hong Kong after receiving a 20-month suspended sentence on embezzlement charges in Germany.

He set up Kimpire Ltd and a network of inter-related companies in December 2002, shortly after arriving. They included Data Protect Ltd, the company that became Megaupload.

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Comments and questions
44

So, are you moving to Hong Kong, Mr Dotcom?

For someone who claims the US and NZ governments destroyed his business he sure has rebuilt it rather quickly.

Just shows you cant keep a good man down.
Shame all NZ's equivalent talent have long left for greener pastures.

Do you think that seizure of assets and destruction of his business had NO effect on him in "mega" monetary terms, Dotcom hasn't just sat on his butt and taken it - he has fought on to rebuild what was lost- in adverse circumstances also - Good on the man....

And note he rebuilt using his money, not taxpayers, so where he spends it is up to him.

Why on earth would he ever want to help NZ 's economy (anyway), after the way he has been treated here? Sheesh! Besides, he's making a wise business decision and spreading his risks. A smart move by the fat guy.

I don't know enough about his business to comment on its legitimacy or otherwise, but I do empathise with him, having been involved in a bizarre copyright action that dragged through the NZ courts for about x 10 years, all based on fabricated nonsense and which destroyed much

NZ's given Kim a fair suck of the sav from NZ.

The raid on his mansion was over-the-top and illegal, but a strong and independent judiciary stood up for him and his co-defendants, and upheld his right to sue for millions in compensation.

Although he still faces serious racketeering, money laundering and copyright charges in the US - and yes, they will hang over him for years, if not forever - the NZ system is doing right by him in its hard review of the raid, and arguments over the extradition. And he's been granted generous access to funds to allow him to keep living in his mansion in the meantime.

And while the John Key's been quite dismissive, Dotcom's also been able to appear before the PM at a subcommittee panel and put his views on the spy bills (and what a classic encounter it was - read The John and Kim show). Not many countries would have afforded him that opportunity.

A lot of New Zealanders have stood up for Kim, and engaged with him; sometimes groaning at his clowning and attempts to co-opt various issues to his own ends, but also giving him good hearing as raises issues of real interest around modern media, copyright and privacy.

He's not returning the love with Baboom.

It might be a sensible business and legal decision to offshore. But as noted, it's not such a smart move for an aspiring politician who's previously talked up NZ as a great place to run his business - and has only had legal events fall strongly in his favour since.

Next we'll be asking, what happened to the plan to host Mega in NZ, and use its huge international bandwidth demands to help bankroll a new cable to the US? Free broadband? No data caps? Now that sounds like someone in campaign mode. Chance would be a fine thing if he could deliver.

He can't invest in the pipe until his internet businesses are fully steaming. Catch 22 for New Zealand IT regardless, I would think.

If nothing else, the guy is an innovator and as his ideas evolve/ ebb and flo, then maybe so do his priorities....??

If his current and future business activities dance on the cusp of complying with NZ copyright law, then of course he needs to spread his risks.

Personally, I believe that copyright law (worldwide) should be consigned to history. It can be obscenely complex and is an anthemia to creativity and economic growth, and can be used as a mechansim by which to stifle, legitimate business competition.

The irony is, almost all of us every day of our lives, infringe copyright law without a second thought. As you will know, copyright law also applies to artistic works of three dimensional design eg. automobiles/plant and machinery ete etc. Even the design of the house you live in, maybe in breach of copyright law or, at least some component of it will undoubtedly be.

So next time there’s a hovering helicopter in you area…you’d better run for cover! All of us.

OMG Paul Marsden If you believe the copyright laws need consigning to history, you obviously never studied history, and have never spent years or weeks or even minutes creating anything new and of worth to others... probably because you're generationally impaired in the consideration of cause and effect, and also in the attention-span required to achieve anything inventive.

Yeah, you're probably right. Sorry.

A very good and fair commentary Mr Keall.
I look forward to the questions and answers you indicate are pending.

Most programming work is offshored to India by almost ALL NZ companies. Nothing new there.

That is hogwash - we deal with the top 10 development shops in NZ by way of developers and software projects delivered , and if you can prove what you have said as far as offshoring , I will believe it, but I suspect I will be waiting for eternity and there is not an ounce of truth in what you say...

I work in the Telecommunication and Utility space - all companies use India for Software development and have a small core here in NZ to prove functionality.

Lots of companies offshore software development. But others, like Orion Health, deal with the skill shortage by import skilled staff instead.

Some companies find it works for the to offshore development. Some find it more efficient to keep things close at hand.

But again, politics is an expectations game. Kim's talked up NZ, then looked offshore for his latest projects.

He's only here to stop his arse getting fried by the USA - for a multi national business person have you not stopped to think why he hasn't left the country for years to attend to his businesses and see friends and family??

Don't be fooled by the smoke and mirrors - he is a very big loud fish in a small subdued pond , and as the article states, has no interest in keeping jobs here or creating and investing locally

I wouldn't put even half a dozen of my eggs in the NZ basket if I was him. Doesn't much matter where the company is registered. We know the internet pipe into NZ is too small for him to service his businesses. The money will come back here eventually though, once he's beaten the US and they can't take it away from him again. Why does John Key have his mansion bach in Hawaii?

Good arguments, on the face of things.

But Kim's previously said NZ's a great place for a software startup, and that he'll employ Kiwis - and legal events have only fallen more strongly in his favour since.

The pipe into NZ is small, but that doesn't mean Kim can't register the service here, and develop it here, even if it's hosted on a web server offshore. And of course at one point he did talk up hosting Mega in NZ, the better to help the service be an anchor customer and perhaps an investor in a new international cable.

Fair. Well, we'll see. Interesting times.

Dotcom is wise to have his servers well away from NZ and the USA.

It's refreshing to see someone like Dotcom introducing his verve and chutspah into our somewhat stolid society.
He's had to overcome many obviously biased and heavily controlled challenges,assisted/instigated by our prime minister no less!
We wish him every success!
paleo martin

We need more like Dotcom to get the country moving.
liberte

You mean hiring developers from offshore and hiring infrastructure offshore? Where is the benefit for NZ in this? Do you hope he will buy you a few more icecreams?

He does appear good at talking the talk. Not so good on the other.

All the pre-requistes of a politician then.

If only for his exposure of corruption he is great value.

The woolly thinking displayed in most of these blogs, is very frightening considering that we are within 12 months of an election!

I agree with you Mr Roberts - wooly thinking but worse - a very naive bunch of bloggers. Dotcom 's aganda wiill never fit with NZ values.

NZ has values? Not from what I saw our government dish out to Dotcom. This country is a puppet of the US.

"but also giving him good hearing as raises issues of real interest around modern media, copyright and privacy'

Chris Keall opines (above), but by the time this matter gets to trial (if ever), then technology would have already moved ahead in leaps and bounds, and therein lies the problem.

The Courts ie judges/lawyers et al, are hopelessly out of the depth when it comes to matters of commerce, technology and or, engineering for example . I have seen "experts" testify in court about technology in which they knew nothing about, but they are all players in the Court room game where charades, lies and nonsense, can abound

Judge David Harvey, who handled early phases of the extradition case (he relaxed Dotcoms' bail conditions on April 2 and May 29, 2012) is widely respected in the tech industry, and beyond, for his internet savvy (though he did get into some TPP-related bother that saw him remove himself from the case - see www.nbr.co.nz/opinion/what-judge-harvey-said).
 
Dotcom has been granted access to millions from his frozen funds, and has used it to hire a top flight legal team across NZ and the US. They show no signs of being out of their depth.

Chris, the substantive matter of copyright infringement, has yet to be argued.

Dotcom's court success todate, has nothing to do with the matter

Get off his Nut Paul.. Every comment you are hopelessly defending dot.com. Show me one good thing he has done, donating fire works to the city then throwing his toys when things havent gone his way. He is disruptive to the NZ economy and Politics. NZ politics will become a side show with him involved. If he doesnt like the hand thats dealt to him in NZ then he is more than free to move somewhere else. I doubt he will be treated any differently.

He exposes corruption....and for that he needs a knighthood.

Set up business on a mega scale offering copied recent U.S. blockbuster movies, and pay those who provide the best copies to upload them to Mega, then expect copyright to be at the forefront of the problems to deal with. A leopard does not change its spots. Copies of music and movies, sounds like more of the same old ....you can't easily turn a man away from sources of easy money that were previously enjoyed. Easy money, leopard spots, copy this and that, its all too obvious where this is all leading to. What is concerning is how many people measure others by the size of their bank accounts and seemingly easy money making skills.

Dot Com has more credibility than some current NZ politicians, who were very quick to distance themselves from the very man they courted for campaign contributions, he stood up to his bullies and won, something that all kiwi's admire, I like him and wish him well.

Yes, Dotcom's done well standing up to various politicians, including Key over the raid, and Banks over the undisclosed campaign donation (although some of Dotcom's right-on supporters may wonder why he was donating such a large sum to Banks in the first place).

Storm in a teacup... capital like water will find its natural level. If he went to any reputable software business in NZ at least part of that work, if not all, would be offshored by them. People forget that programming is one of the most labour intensive business around. Sure they are smart labourers, but "smart" is not the exclusive preserve of (white) middle class NZ, and the fact is labour is cheaper overseas. If F&P said they were bringing manufacturing back to NZ everyone would say they were nuts!

Using the "it's politically more agreeable to spend money here" argument as if somehow that will buy him a better judicial outcome?, or he should throw money at NZ rather than demonstrate commercial nouse? all seems quite counterproductive to the argument that NZ needs to get smarter. He is doing the right thing, the thought leadership and innovation is being done here, the high volume low value work is being done optimally, overseas.

Chris is right: you'd think Kim would have the strategic nous to see the value of in-shoring jobs. There's no such thing as low value work to the people who do it.

Elsewhere, Kim's been at pains to appear integrated with NZ's digirati, where he know he has his strongest political allies.

For someone who's legal disputes are played out in the letter and verse of central government legislation, a political party is a smart PR move. But I suspect that - in the unlikely event he gets anywhere - that he'll make the same mistake that has undone many right wing politicians, and mistake the running of a country for running a business.

New Zealand is a business. Auckland is a business. And maybe the sooner we had people running both AS a business the sooner we would have something of value at low cost to the consumer (ratepayers and taxpayers) rather than the rabble and ego-fest that parades as leadership currently.

Park your high horse for a minute Chris. Why not focus your criticisms on all the tech companies who received millions in grants that sold out to foreign buyers with their jobs going offshore.

The correct business decision is to maximise shareholder wealth, and its not surprising companies need to look offshore when you look at the fundamentals of its one trick pony economy. Cows.

NBR has raised the issue of tech companies who receive millions in govt grants then sell themselves offshore. Read Another Kiwi tech gutted after offshore sale.
 
It's been fun having Kim in the country. He's created a good business, Mega, and raised issues worth discussing.
 
It could well be a good decision financially to look offshore for development, but not so much when you're an aspiring politician and a number of successful NZ companies find it better to keep software development jobs onshore. The Hong Kong ownership/Portugal development/German hosting doesn't sit well with Kim's earlier statements about NZ being a great place to base his business. 
 
And once you aim for the Beehive, you also have to answer questions like, "He may have failed to disclose the donation, but, Kim, what were you doing donating the authoritarian John Banks' $50K in the first place?" Good luck explaining that one to the adocates of a free and open internet who form Dotcom's natural support base.

its been more than just fun having Kim dot Com in the country, it has been an education for me on how little NZ sovereign law means when this government acts on behalf of their US overlords, the fact that Kim Dot Com had to fight so hard to have this case exposed for what it is only infuriates me more when you consider not everyone who could find themselves in a similar position has the presence, funds and nous to fight for their basic rights.

... if nothing else, Dotcom added a bit of meat to the techno-political discussions and some bulk to the glamour of being a zillionaires. How can we fault him for that?