Dotcom, creator of Megaupload, has said that data on his new Mega service will be encrypted on the client-side using the AES algorithm. Mega, a file sharing service, does not know the encryption keys to uploaded files, they cannot decrypt and view the contents and therefore cannot be responsible for the contents of uploaded files. He mentioned in an interview with Ars Technica that "Each file will be kept with at least two different hosters, in at least two different locations". Mega has no idea what anything is. It could be family photos or work documents, or an entire discography of your favorite band. All available online and easy to share. And importantly, Mega doesn't have the decryption key necessary to get in. Dotcom has come up with a masterstroke of copyright subversion.
Mega can't work with hosting companies based in the United States. The U.S. Department of Justice is frequently seizing domains without offering service providers a hearing or due process. In the U.S., service providers may receive notifications of copyright infringement under the Digital Millennium Copyright Act (DMCA). If valid and presented in the right form, the service provider is required to quickly remove or block the content.
The Mega team indicated that some companies, such as film studios, will have direct access to remove files if they discover the encryption keys online and determine that the content infringes their copyright. Dotcom added that if such companies want to use that tool they would have to agree, prior to receiving access in their website, not to sue Mega or hold the site accountable for the actions of its users.
Mega says that is has more to come. Mega which was introduced two weeks ago, just became a lot more useful to content pirates, thanks to a community-fed search engine of links to content hosted on Mega’s servers.