Flamboyant Megaupload founder unveils file-sharing sequel
* Kim Dotcom's new site will avoid U.S. hosting companies
* Users will control all content to avoid Mega liability
* Website launch swamped by users and FBI agents -Dotcom
* Dotcom still faces hearing on extradition from New Zealand
WELLINGTON, Nov 1 (Reuters) - Like a good Hollywood sequel, Megaupload is back.
Kim Dotcom, the founder of the shuttered file-sharing site that housed everything from family photos to blockbuster films, on Thursday announced a new online storage service called Mega that will give users direct control - and responsibility - over their files.
Mega will launch in January 2013, just before the internet entrepreneur is scheduled to face an extradition hearing to the United States where he and other Megaupload operators face charges of online piracy, fraud and money laundering.
In a snub to U.S. prosecutors, the site will not utilise U.S.-based hosting companies as partners in order to avoid being shut down by U.S. authorities.
The U.S. government alleges that Megaupload, once one of the world's most popular websites, was directly responsible for illegally uploaded content on the site and that it netted $175 million from unlawful activities.
"The new Mega will not be threatened by U.S. prosecutors," Dotcom told Reuters in an interview, adding that he was confident Mega would avoid violating U.S. law.
"The new Mega avoids any dealings with U.S. hosters, U.S. domains and U.S. backbone providers and has changed the way it operates to avoid another takedown," he said.
Mega is the follow-up to Megaupload, which was shut down in January this year when New Zealand police helicopters swooped into the flamboyant Dotcom's mansion outside Auckland to seize computers and other evidence at the request of U.S. authorities.
Users of the new cloud-based service will be able to upload, store and share photos, text files, music and films, encrypt those files and grant access using unique decryption keys.
"You hold the keys to what you store in the cloud, not us," a statement on the Mega website said.
While the new site will operate faster and boast a bigger storage capacity, the encryption technology marks a major change from Megaupload as Mega operators will not have access to files and will therefore be immune to content liability.
Ensuring that files are not pirated will be the job of content owners, a major change from Megaupload, which the U.S. film industry says was directly responsible for taking down illegally uploaded content.
"Content owners can still remove infringing material and they will even get direct delete access if they agree not to make us responsible for actions of users," Dotcom said.
Dotcom's announcement comes just weeks after a U.S. federal judge ruled that Washington's criminal case against Megaupload will go forward for now.
Dotcom, a German national who holds New Zealand residency, faces an extradition hearing in March even though a New Zealand court ruled that the January raid and seizure were unlawful, while the nation's spy agency was found to have illegally spied on Dotcom.
Thursday's announcement was delayed for about one hour after the website was overloaded by users. According to Dotcom, much of the traffic was driven by U.S. authorities.
"FBI agents pressing reload...We see their IP addresses," he said on his Twitter feed.
(Reporting by Naomi Tajitsu; Editing by Matt Driskill)