A lawyer for a digital rights group says Kim Dotcom's new website is still vulnerable to legal action but may have extra protection because it is based in New Zealand.
Mega.co.nz was launched at 6.48am on Sunday, a year after the raid on Mr Dotcom's mansion at Coatesville, Auckland in which Mr Dotcom was arrested to face copyright fraud charges. The Megaupload site he co-founded was shut down.
US-based copyright lawyer Mitch Stoltz, of the Electronic Frontier Foundation, said the Mega website will be closely monitored by authorities.
Mr Stoltz told Radio New Zealand's Nine to Noon programme on Monday that whether a site is raided or shut down depends on the governments of the states where the physical equipment is located. "I understand this service is largely not going to be located in the United States."
Kim Dotcom holds a news conference at Sunday's launch party. Photo: RNZ
The Mega site is different technically to its predecessor, but many commentators say sharing illegal content is still likely.
On the website, file-sharing is still possible between users but all content is encrypted so the site's management cannot see what is being uploaded and exchanged. Users will have a code, which they can share with anyone, to unlock the files.
Copyright lawyer Rick Shera told Nine to Noon the site has adopted novel ways to deal with any illegality.
"People can notify Mega if they feel there is infringing content and that content will be taken down."
Technology commentator Nat Torkington said the encryption move is an attempt to protect the site from future prosecution. However, Mr Shera said offering a service with user-controlled encryption is designed to ensure privacy for users, not avert legal action.
Listen to Nick Shera and Mitch Stoltz on Nine to Noon
Piracy and porn fears
South Pacific Pictures chief executive John Barnett says the site will undermine New Zealand's creative industries and encourage piracy.
Mr Barnett said he has seen nothing to suggest the new site will be any better for those who own content that may be illegally shared.
Investor Brian Clarkson said he had no qualms about the legality of the business.
Mr Clarkson, chief executive of Instra, told Radio New Zealand's Morning Report programme that while site operators cannot guarantee there will be no illegal downloads of copyright material, they have robust procedures in place for removing them if notified of their existence.
Technology commentator Peter Griffin said the site appeared to be watertight at this stage, but the Motion Picture Association of America is sceptical.
Meanwhile, a New Zealand agency fighting child sex abuse warns that Kim Dotcom's new website could be a new platform for child pornography.
Alan Bell, national director of the organisation ECPAT, predicts that people will take advantage of the privacy the website provides because its encryption denies monitoring that would enable people to see if material is appropriate and legal.
Listen to Peter Griffin
Launch party
A 250-strong contingent of local and overseas media, IT specialists and supporters attended the launch party at Kim Dotcom's Coatesville mansion in Auckland on Sunday night.
Men dressed as armed policemen re-enacted the raid of a year ago, abseiling down the side of the mansion and running through the crowds with fake guns as a helicopter with FBI painted on the side circled overhead.
The internet entrepreneur told the crowd the website had more than 1 million views and 500,000 registrations on its first day of operation.
Mr Dotcom said Mega is a smarter, faster more secure way to upload and share large files, and won't attract attention from the authorities.
"Our lawyers assure us that we are fully compliant with the law so I don't think we need to worry about any kind of take-down anytime soon."
He plans to launch another site, Megabox, which he says will allow musicians to upload and market their work without the need for a record company. He is also writing a book, which he intends to release in April.
Mr Dotcom, a German national with New Zealand residency, is awaiting a court hearing to determine whether he will be extradited to the United States. The four-week hearing has been delayed until August.
He said he plans to take legal action against those responsible for the case in the United States if the extradition case fails, but will not sue the New Zealand Government.