In response to growing fears of government spying, yesterday Kim Dotcom announced that parts of his company will relocate to Iceland if that means keeping customers' data secure. Speaking with TorrentFreak, Dotcom says that continued broad surveillance will have serious financial consequences. "Mass surveillance and copyright extremism will cost the US economy more than any terrorist attack or piracy," he predicts.

As the Edward Snowden fallout continues, yesterday Kim Dotcom revealed that if certain new surveillance laws are passed in New Zealand he will have little choice but to relocate some of Mega’s operations overseas.

Privacy and security have become a hot topics for Dotcom. He was a surveillance target not only for the United States but also for local security service GCSB. Dotcom is tied up in a legal battle with the latter after a court found they monitored him illegally.

With Mega billed as ‘The Privacy Company’, Dotcom has a vested interest in battling the level of spying that can be carried out by the New Zealand government. Speaking with TorrentFreak, Dotcom explains why he sees the powers granted by these proposed new laws as a threat.

“The US government and the other Five Eyes partners (UK, Canada, Australia and New Zealand) have an agreement to push for new spy legislation that will provide them with backdoors into all Internet infrastructure and services. The NZ government is currently aggressively looking to extend its powers with the GCSB and the TICS act, which will force service providers with encryption capabilities to give them secret decryption access,” Dotcom explains.

Immediately it’s clear why this is an issue for Dotcom. All files uploaded to Mega are encrypted to the point where not even the company knows the data it’s carrying. Should the new legislation be introduced all that would have to change, but Dotcom says that isn’t going to happen.

“Mega doesn’t have decryption keys by design and we never will. Privacy companies like Mega will have to look for jurisdictions that care about basic human rights like privacy and freedom of speech,” he says.

Dotcom doesn’t go into detail on a full list of good candidates but says that smaller nations, particularly those with few enemies that don’t need a large spy apparatus, could be a good choice. However, one in particular stands out.

“Iceland is a friendly small country without enemies. They don’t spy on the world and they don’t care. It’s countries like Iceland that will see a rise in Internet services. There is a huge opportunity for smaller nations because the business that is going to leave the US is looking for a new home,” he predicts.

But while the small flourish, Dotcom says that the approaches taken by the ‘Five Eyes’ countries will see them ruin the growth of their own IT industries. And it seems that the United States will suffer the most.

“I expect that more and more Internet businesses will find the hostile US environment unbearable and will move their business elsewhere. Who wants to store any sensitive data on US based servers anymore?

“Over the next 10 years you will see a decline of US Internet giants and the rise of non-US Internet companies that care about user privacy. We will not see a strong NSA like before the Snowden leaks again. The truth is out there and when politicians and laws can’t protect our basic human rights, innovation and friendly jurisdictions will save us,” he says.

But can a country like Iceland cope with such a large influx of technology companies given their current infrastructure?

“Iceland has limited connectivity,” Dotcom admits. “But for now it’s a great option. Others will arise. I am sure of that. We have already setup a company in Iceland.”

So with preparations already underway should the worst-case scenario present itself, does it follow that Mega will desert the land of the Kiwis entirely? Dotcom told TorrentFreak that eventuality is unlikely but if any of their services face government demands for backdoors they will relocate elsewhere. Rest assured though, that won’t be in the United States.

“The US is on a path of destroying its massive lead in the Internet economy. Mass surveillance and copyright extremism will cost the US economy more than any terrorist attack or piracy,” Dotcom says.

“Remember, move your Internet business to small nations that are free of conflict and therefore don’t have a massive spy agenda. Look for countries that have robust privacy and human rights laws. Stay out of the US. Don’t even host a single server there,” Dotcom concludes.