Megaupload founder's homes raided, $5M in luxury cars seized.

By staff and news services – Image:

Police in New Zealand on Friday raided several homes and businesses linked to the founder of, a giant file-sharing site shut down by U.S. authorities, and seized guns, millions of dollars, and nearly $5 million in luxury cars, officials said.

Police arrested founder Kim Dotcom and three Megaupload employees Thursday on U.S. accusations that they facilitated millions of illegal downloads of films, music and other content, costing copyright holders at least $500 million in lost revenue. Extradition proceedings against them could last a year or more.

With 150 million registered users, about 50 million hits daily and endorsements from music superstars, was among the world's biggest file-sharing sites. According to a U.S. indictment, the site, which was shut down Thursday, earned Dotcom $42 million in 2010 alone.

Although the company is based in Hong Kong and Dotcom lives in New Zealand, some of the alleged pirated content was hosted on leased servers in Virginia, and that was gave U.S. prosecutors jurisdiction to act.

New Zealand police served 10 search warrants at several businesses and homes around the city of Auckland.

Police spokesman Grant Ogilvie said the seized cars include a Rolls-Royce Phantom Drophead Coupe worth more than $400,000 as well as several Mercedes. Two short-barreled shotguns and a number of valuable artworks were also confiscated, he added.

Pictures posted on Flickr and technology news website Gizmodo showed the haul included a 2010 Maserati and a pink Cadillac. One Mercedes had the personalized license place “MAFIA,”while another had a plated that read “CEO.”

A report by New Zealand news website said Detective Inspector Grant Wormald from the Organized and Financial Crime Agency NZ (OFCANZ) gave details of the extraordinary raid, which had been planned for several months.

“Police arrived in two marked police helicopters,” said Wormald, according to the website. “Despite our staff clearly identifying themselves Mr. Dotcom retreated into the house and activated a number of electronic locking mechanisms. While police neutralized these locks he then further barricaded himself into a safe room within the house which officers had to cut their way into.”

Once they gained entry into this room they found Dotcom near a firearm which had the appearance of a sawed-off shotgun, Wormald said.

“It was definitely not as simple as knocking at the front door,” he added.

New Zealand's Fairfax Media reported that the four defendants stood together in an Auckland courtroom in the first step of the extradition proceedings.

'Nothing to hide'
Dotcom's lawyer raised objections to a media request to take photographs and video, but then Dotcom spoke, saying he didn't mind photos or video “because we have nothing to hide.” The judge granted the media access, and ruled that the four would remain in custody until a second hearing Monday.

Dotcom, Megaupload's former CEO and current chief innovation officer, is a resident of Hong Kong and New Zealand and a dual citizen of Finland and Germany who had his name legally changed. The 37-year-old was previously known as Kim Schmitz and Kim Tim Jim Vestor.

Two other German citizens and one Dutch citizen also were arrested and three other defendants — another German, a Slovakian and an Estonian — remain at large.

Megaupload has retained Washington, D.C. power attorney Bob Bennett in the case, according to a person inside the company. Bennett is best known for representing former President Bill Clinton during the Monica Lewinsky scandal. The person within Megaupload spoke on condition of anonymity because he was not authorized to discuss the company's plans.

The Electronic Frontier Foundation, which defends free speech and digital rights online, said in a statement that the arrests set “a terrifying precedent. If the United States can seize a Dutch citizen in New Zealand over a copyright claim, what is next?”

The indictment was unsealed one day after websites including Wikipedia and Wired shut down in protest of two U.S. proposals intended to make it easier for authorities to go after sites with pirated material, especially those with overseas headquarters and servers.

Before Megaupload was taken down, the company posted a statement saying allegations that it facilitated massive breaches of copyright laws were “grotesquely overblown.”

“The fact is that the vast majority of Mega's Internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch,” the statement said.

Several sister sites were also shut down, including one dedicated to sharing pornography files.

News of the shutdown seemed to bring retaliation from hackers who claimed credit for attacking the Justice Department's and FBI websites. Federal officials confirmed the Justice Department site was down for hours Thursday evening, and that the disruption was being “treated as a malicious act.”

A loose affiliation of hackers known as “Anonymous” claimed credit for the attacks. Also hacked was the site for the Motion Picture Association of America.

According to the indictment, Megaupload was estimated at one point to be the 13th most frequently visited website on the Internet. Current estimates by companies that monitor Web traffic place it in the top 100.

Megaupload is considered a “cyberlocker,” in which users can upload and transfer files that are too large to send by email. Such sites can have perfectly legitimate uses. But the Motion Picture Association of America, which has campaigned for a crackdown on piracy, estimated that the vast majority of content being shared on Megaupload was in violation of copyright laws.

The website allowed users to download some content for free, but made money by charging subscriptions to people who wanted access to faster download speeds or extra content. The website also sold advertising.

Megaupload was unique not only because of its massive size and the volume of downloaded content, but also because it had high-profile support from celebrities, musicians and other content producers who are most often the victims of copyright infringement and piracy. Before the website was taken down, it contained endorsements from Kim Kardashian, Alicia Keys and Kanye West, among others.

The company listed Swizz Beatz, a musician who married Keys in 2010, as its CEO. He was not named in the indictment and, via a representative, declined to comment.

The five-count indictment, which alleges copyright infringement as well as conspiracy to commit money laundering and racketeering, described a site designed specifically to reward users who uploaded pirated content for sharing, and turned a blind eye to requests from copyright holders to remove copyright-protected files.

The Justice Department said it was illegal for anyone to download pirated content, but their investigation focused on the leaders of the company, not end users who may have downloaded a few movies for personal viewing.

A lawyer who represented the company in a lawsuit last year declined to comment Thursday. Efforts by the Associated Press to reach an attorney representing Dotcom were unsuccessful.

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Yahoo co-founder Jerry Yang leaving company.

Contributor: MICHAEL LIEDTKE.  Image:

January 18, 2012

Yahoo co-founder Jerry Yang is leaving the struggling company as it tries to revive its revenue growth and win over disgruntled shareholders under a new leader.

The surprise departure, announced Tuesday, comes just two weeks after Yahoo Inc. hired former PayPal executive Scott Thompson as its CEO.

Yang, 43, endorsed Thompson in his resignation from Yahoo’s board of directors. He had been on Yahoo’s board since the company’s 1995 inception.

“My time at Yahoo, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life,” Yang wrote in his letter to Yahoo Chairman Roy Bostock. “However, the time has come for me to pursue other interests outside of Yahoo.”

Yang is also stepping down from the boards of China’s Alibaba Group and Yahoo Japan. Yahoo is negotiating to sell its stakes in both of the Asian companies as part of its efforts to placate investors.

Besides surrendering the board seats, Yang is giving up his title as “chief Yahoo.”

Although a popular figure among Yahoo employees, Yang had alienated the company’s shareholders by turning down a chance to sell Yahoo in its entirety to Microsoft Corp. for $47.5 billion, or $33 per share, in May 2008. Yahoo shares haven’t topped $20 for more than three years. The stock gained 49 cents to $15.92 in extended trading after Yang’s decision was announced.

At the time the Microsoft talks unraveled, Yang was in the middle of an 18-month stint as CEO. Shareholder discontent with his performance in that role led Yang to step aside as CEO and turn over those duties to Silicon Valley veteran, Carol Bartz.

Yahoo’s revenue has been falling in recent years even as advertisers have poured more money into the Internet. Much of the money, though, has been going to Internet search leader Google Inc. and Facebook’s online social network, as Yahoo fell further behind in the race to come up with compelling new products.

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SOPA dead. For the time being.

Contributor: John Gaudiosi.


The growing anti-SOPA (Stop Online Piracy Act) support that has swept through the gaming and Internet community found a very big ally today. With websites like Reddit and Wikipedia and gaming organizations like Major League Gaming prepared for a blackout on January 18th – the same day that the House Judiciary Committee hearing on HR 3261was scheduled in Washington, DC – President Barack Obama has stepped in and said he would not support the bill. SOPA has been killed, for now.

Much to the chagrin of Hollywood, the Entertainment Software Association (which has been a backer of the bill from early on), and Internet domain company (which lost many accounts as a result of its support for the bill); SOPA has been shelved. The Motion Picture Association of America, one of the bill’s largest sponsors, is expected to regroup.

California congressman Darrell Issa, who has been opposed to the bill from the beginning, praised the Internet action that has swept like a virus across the Web the past week.

“The voice of the Internet community has been heard,” said Issa. “Much more education for members of Congress about the workings of the Internet is essential if anti-piracy legislation is to be workable and achieve broad appeal.”

But there remains another similar bill, Protect IP (the Enforcing and Protecting American Rights Against Sites Intent on Theft and Exploitation Act), that poses a problem for gamers and Internet users. This legislation is scheduled to go before the Senate on January 24th.

Both SOPA and Protect IP attempt to combat online piracy by preventing American search engines like Google and Yahoo from directing users to sites distributing stolen content. Both bills also would enable people and companies to sue if their copyright was infringed. Obama has come out against both bills, which killed SOPA and puts pressure on senators come January 24th. The full White House response can be read here.

“Any provision covering Internet intermediaries such as online advertising networks, payment processors, or search engines must be transparent and designed to prevent overly broad private rights of action that could encourage unjustified litigation that could discourage startup businesses and innovative firms from growing,” said The White House. “We expect and encourage all private parties, including both content creators and Internet platform providers working together, to adopt voluntary measures and best practices to reduce online piracy.”

Just like piracy itself, this debate isn’t over. Expect more bills to move forward, although the wording in future legislation is expected to be more narrowly focused in an attempt to appease the current administration. But given the current economic climate and the upcoming Presidential election, there could be a different administration entering The White House soon, changing the landscape for these types of bills.


Reelection isn't far away. But yea, SOPA or the like can be reintroduced.

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Foxconn Resolves Pay Dispute With Workers.

Via – Image:

Contrinutor: DAVID BARBOZA.

SHANGHAI — Foxconn Technology, the largest contract electronics manufacturer in the world, said Thursday that it had resolved a pay dispute with scores of workers at one of its factories in central China, following a large protest that involved threats by some workers to commit suicide by leaping from the top of a factory building.

Enlarge This Image

The company, a major supplier of products to Apple, Hewlett-Packard, Microsoft and other electronics giants, said the dispute last week had been resolved successfully and peacefully but that 45 workers had resigned.

In a statement released Thursday, Foxconn said most of the protesting workers had agreed to return to work after negotiations were held with the company and local government officials. But details of the agreement were not released. One of the workers said they had been promised additional compensation.

Foxconn said the protest had involved about 150 of the 32,000 employees at its campus in the city of Wuhan. It was the latest in a long-running series of labor troubles to befall the company, which supplies popular goods like the Apple iPhone, the Amazon Kindle and the Microsoft Xbox.

In 2010, Foxconn was hit by a wave of suicides by distraught workers at several of its Chinese sites. The company, which is controlled by Hon Hai Hai Precision Industry of Taiwan, has been accused of forcing workers to endure long hours and harsh working conditions for little pay.

Under pressure from Apple and other major brands, Foxconn has pledged to improve working conditions in China, and the company has even hired psychiatrists to counsel workers. The company has also embarked on a huge program to invest in robots and to move some of its production to central and western parts of China, where labor is less costly and more abundant. The company says the new campuses also allow migrant workers to live closer to their hometowns.

But while working conditions at Foxconn and other exporters in China may be slowly improving, the demands of workers seem to be rising faster.

There has been a rash of strikes and labor protests throughout the nation in recent months, partly in response to inflation and a greater awareness of the labor laws. The strikes, which sometimes involve thousands of workers, often include demands for higher pay, insurance and better working conditions.

In Wuhan, some of the workers who protested said they were angry about being forced to move from Foxconn’s biggest campus, in the southern Chinese city of Shenzhen, to Wuhan.

One worker who participated in the Wuhan protest said by telephone that workers shifted to Wuhan had been promised about $450 a month in salary, including overtime pay, but that they had been given about a third less than that and that working conditions in Wuhan were much more difficult.

The worker, who asked not to be identified for fear of being punished by Foxconn, said more than 100 workers had decided to protest on the roof of a three-story building on the campus. The protest lasted more than eight hours.

Several threatened to commit suicide if their demands were not met, he said.

“That day was very cold,” he said. “Some women could not stand the freezing temperatures and fainted.”

In a statement released Thursday, Foxconn said: “The welfare of our employees is our top priority, and we are committed to ensuring that all employees are treated fairly and that their rights are fully protected.”

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New Lawsuit Means All Major Labels Are Suing Grooveshark=No more!

Contributor: BEN SISARIO.

Grooveshark, a popular digital music service that is being sued for copyright infringement by three of the four major record companies, now has problems with the one big label that it has a licensing deal with.

On Wednesday, EMI Music Publishing filed suit against Grooveshark’s parent company, the Escape Media Group, for breach of contract, saying that since striking the deal in 2009, Escape has “made not a single royalty payment to EMI, nor provided a single accounting statement.”

In the suit, filed in New York State Supreme Court in Manhattan, EMI seeks unspecified damages. But in a series of recent e-mails and legal correspondence included with the filing as evidence, EMI asks Grooveshark for at least $150,000 in royalties.

In a statement, Grooveshark said: “This is a contract dispute that we expect to resolve.”

Grooveshark lets users upload songs to the company’s servers, which other users can then stream free. Founded in 2006, it has signed up 35 million users and attracted major advertisers like Mercedes-Benz.

With the music industry coming to rely more and more on fully licensed services like Spotify and Rhapsody that stream music by subscription, EMI’s suit highlights the legal gray zone in which Grooveshark operates.

Grooveshark says its service is legal under the Digital Millennium Copyright Act, a federal law that protects Internet companies that host third-party material if they comply with take-down notices from copyright holders.

But the company has repeatedly run afoul of the big music companies. EMI made its licensing deal with Grooveshark only after it settled an earlier copyright infringement case. And late last year, the Universal Music Group, the largest label, filed a federal copyright infringement case against Grooveshark, with Sony Music and the Warner Music Group later joining the suit.

Last year, a consortium of investors led by Sony made a deal with Citigroup, EMI’s owner, to buy the company’s publishing division for $2.2 billion. Universal, owned by the French conglomerate Vivendi, agreed to buy EMI’s recorded music division for $1.9 billion. Both deals are subject to approval from government regulators.


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Contributor: Nick in Food I Made.

“It’s no secret that chicken and waffles taste amazing together, but why should you have to deal with two foods sitting separately side by side when you can just combine them into one delicious handheld snack? That’s the exact question that led me to create these chicken and waffle wings.

The waffle breaded chicken wings were actually amazingly easy to make. I started off by cooking four “drumette” sections of chicken wings and whipping up some waffle batter. Once that was done I simply dunked the wings in the batter and placed them in my waffle iron with the ends of the wings (which I left unbattered so the wings would be easier to pick up and eat) sticking out. After that all you really need to do is drizzle some syrup over them and you’re all set!

If you try making these yourself the one thing you’ll need to be sure of is that you select wings that have a decent amount of meat on them. No one wants to take a bite only to get a mouthful of waffles and barely any chicken. The chicken wings I used were 1/4 of a pound each and I ended up with the perfect chicken to waffle ratio.

You know how back when I made the chocolate covered deep fried Triple Double Oreos I commented that they’d be the perfect food to be sold at state fairs all across the country? Forget about those for a second, because these chicken and waffle wings are what fair goers need to be eating this summer!”



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Contributor: Peter Kafka.

Want to watch a new movie just out on DVD from Warner Brothers? You’re going to have to buy it, or wait even longer to get it from Netflix or other disc renters.

A new deal between Time Warner’s movie studio and Netflix, Redbox and Blockbuster will double the “window” for new releases. That means the services will now have to wait 56 days after the discs first go on sale to offer them to their customers, instead of 28 days. [UPDATE: Redbox parent Coinstar now says they haven't agreed to a new deal; see below]

The move is part of Hollywood’s ongoing campaign to bolster flagging DVD sales, and sources tell me the new deal is supposed to be announced at next week’s Consumer Electronics Show in Las Vegas. Warner Brothers executives have already talked publicly about extending the current window.

This is the second time that Warner has been able to get the rental services to wait before distributing its movies.

In 2010, it struck deals with Netflix, and later Coinstar’s Redbox, to wait 28 days before renting its new discs. Coinstar and Netflix later landed similar pacts with most of the other big studios. (Coinstar did up end up in legal battles with Universal Studios and 20th Century Fox, which like this Web site is owned by News Corp.)

Two years ago, Netflix was able to argue that by delaying access to DVDs, it was able to get its hands on more streaming content, and lower prices for the discs it did buy. This time around, though, Warner won’t be granting any additional digital rights to the studios. It will simply be offering them the ability to buy discs in bulk, at a significant discount to retail pricing, like they already do.

Earlier today, news broke that HBO, another Time Warner unit, would stop selling its DVDs to Netflix altogether, but sources tell me the two moves aren’t directly related. Next week’s planned announcement is supposed to be tied to Warner Brothers’ continuing push for Ultraviolet, an industry consortium that’s supposed to allow home video buyers to watch their purchases on multiple machines, in multiple formats.

Reps for Time Warner, Coinstar, Netflix and Blockbuster parent company Dish Network declined to comment.

UPDATE: Coinstar is now commenting, via email. “The current agreement Coinstar has with Warner Bros. is to receive movie titles 28 days after their release. No revised agreements are in place.” The company’s current deal with Warner Bros. expires at the end of January; PR chief Marci Maule referred me to comments CEO Paul Davis made last fall about pursuing “workarounds” if studios try to extend their windows.


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Best Buy Responds To Reports That It Is Dying A Slow Death.

Remember the article: apparently, BestBuys’ CEO Brian Dunn replied: “

As CEO, I know that criticism goes with the job,” writes CEO Brian Dunn, “and I’m well aware we have some challenges. I also know that errors we make often translate into a poor experience for our customers, and that is simply unacceptable.” is concerned.

Read the Fully:


Best Buy CEO Defies Critics.


Best Buy Co.’s chief executive shot back Friday at critics who have been calling the retailer a relic, as the electronics giant reported lower December sales compared with the year before.

In a lengthy blog post, CEO Brian Dunn acknowledged that some criticism about his company’s performance had merit, calling an episode last month in which the retailer canceled online orders that were placed weeks before Christmas “our fault” and “not representative of how we EVER want to treat our customers.”

More fundamentally, Mr. Dunn said, detractors who have questioned the speed with which Best Buy was adapting its business model to growing online

competition had a “fair criticism.”

But he took strong exception to recent claims, largely on tech blogs, that the Richfield, Minn. company—and specialty-store chains in general—were doomed by the rise of Internet merchants such as Inc., which are outflanking some brick-and-mortar chains on selection as well as price.

He cited a recent study by researcher NPD Group, which found that roughly 80% of electronics were still bought in stores, and added that Best Buy saw store visits climb last quarter.

“This misguided perspective is especially troubling for me, because it blatantly and recklessly ignores overwhelming evidence to the contrary,” Mr. Dunn wrote on his blog, Brian’s Whiteboard. “Best Buy is a financially strong and profitable company.”

Mr. Dunn’s defense met a mixed reaction online even on his own blog. The very first response on Brian’s Whiteboard came from someone—identifying himself as a former Best Buy sales manager—who said he now uses the Internet to search for better deals on sites such as

“I will buy it in your store…use it while I order another one for 75% less on Amazon and then return the new in the box one at your store,” the commenter wrote. “It’s shoppers like me that are multiplying because of research that is available on the Internet and that is why there is concern” about the company.

Best Buy shares have plunged 30% in the past 12 months as the world’s largest electronics retailer by revenue has struggled with slowing sales. Last quarter its sales rose 0.9% at stores and websites open at least 14 months, breaking a streak of five consecutive quarters of declining sales.

But the gains, largely the result of heavy Black Friday promotions, were achieved at the expense of profits, which fell 29%, raising further questions among analysts about whether the company could flourish in the new competitive environment.

Best Buy provided another muddy picture on Friday when it reported that its same-store sales for December slipped 0.4% domestically and 4.3% internationally, but that profits held steady. It did not change its forecast for fourth-quarter earnings.

Analysts generally greeted the results as a positive, saying Best Buy’s situation remained more positive than dire predictions suggested. “Not as bad as feared,” Credit Suisse analyst Gary Balter titled his note to investors.



Check-out Brian Dunns’ Profile:

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