Kim Dotocm’s Mega said PayPal was pressured by Visa and Mastercard to stop dealing with Mega after it was named as not being a legitimate cloud storage service in a report by Net Names, a company that is a kind of private security force on the internet.

Apparently the factor that caused Net Names to classify Mega as illegitimate was that the cloud storage encrypts any files stored there.

Customers will now find it difficult to pay for its services since PayPal will no longer process payments to the cloud storage service. Mega said until it had new payment systems, it would not enforce storage limits or suspend any accounts for non-payment and it had also extended existing subscriptions for two months free of charge.

I find it hard to understand why encryption should be used as a means to de-legitimise a file storage facility. With the amount of government snooping that prevails today, why not encrypt? Mega claims it has more than 15 million registered users in more than 200 countries. Obviously a lot of people think the same way. There are many other companies already offering the same service. Apparently they’re free of Net Name’s judgments.

This is the latest hitch in Mega’s plan to complete a backdoor listing on NZX through the shell company, TRS Investments, which was first mooted a year ago, and it makes me wonder if there is not some kind of pressure being applied to damage what would be a profitable business. We are already well aware of the US govt’s strategy of depriving those it prosecutes of the funds to defend themselves.