"In essence, [Dotcom] is alleging the US movie studios have used credit they have built up with the Democrat Party administration in the USA to have him extradited from New Zealand to face prosecution in the USA," the judge said in his 270-page judgment.
"He submits that the prosecution of him has a political motive and this court should use its discretion to stop his surrender for extradition."
Judge Dawson said the case against the defendants saw copyright holders claiming $175 million in losses.
"That Mr Dotcom has a different point of view about the use of the internet from others, including the US movie studios, does not have the hallmarks of what is ordinarily regarded as political persecution for political beliefs. It is a difference of opinion about a business matter, the use of the internet and the application of copyright law," he said.
Despite the judge's ruling, the quartet are a long way from boarding the plane.
Immediately after Judge Dawson gave his decision, lawyers for the defendants indicated they would appeal against his ruling.
They were given until February 12 to file a draft case for that application.
And Dotcom was resolute outside court. "This is not the last word on the matter," he said. "We have filed an appeal, I'm still on bail and we'll go through the whole process until the very end."
He admitted he was disappointed with the outcome but wished everyone a merry Christmas.
Dotcom took to social media to express his disappointment.
"Thank you for your support. The fight goes on. Enjoy the holidays. I'm happy to be with my kids. There are bigger things than copyright", which was followed by a smiley face.
Later, he wrote: "My team and I just had a good read of today's court decision. Its weak and a Christmas gift in disguise. Woohoo!! #Appeal".
The ruling comes after almost four years of legal wrangling following a dramatic police raid on Dotcom's mansion at Coatesville, Auckland, in January 2012.
Dozens of police, including New Zealand's elite anti-terrorism unit, carried out a dawn raid, arresting Dotcom, Batato and Ortmann.
Van der Kolk, who like Dotcom has permanent New Zealand residency, was arrested at his upmarket Orakei home.
The FBI warrant is seeking the four men on a range of charges relating to the Megaupload business, from criminal copyright violation through to money laundering and operating an organised criminal conspiracy.
If they are eventually found guilty, the defendants could face lengthy jail terms.
The majority of the 13 criminal charges on which they would stand trial in the US carry a maximum penalty of 20 years' imprisonment.
The defendants will remain on bail, reporting to their local police station twice a week, as they await the next step in the long-running saga.
