Yesterday, Dotcom's lawyer, Paul Davison, QC, argued he should be allowed to have access to the internet while on bail, but lawyer Anne Toohey - acting on behalf of the US - fought that.
Mr Davison said it was essential for Dotcom to be able to contact his lawyers - some of whom were overseas - to prepare his case. "It's like saying he shouldn't have access to a phone, it is such a fundamental means of communicating."
Ms Toohey argued Megaupload once made up 4 per cent of the internet's content so there was a high risk of reoffending. She said the consequences of allowing him to use the internet could be far-reaching.
Dotcom was allowed to go free yesterday mainly because of the lack of new evidence that he had any means to flee NZ.
Judge Nevin Dawson said this was despite the "considerable investigative powers" of New Zealand police and the FBI.
In addition, an affidavit from a senior Megaupload staff member said Dotcom had no funds or assets available that could help him leave New Zealand.
Also, since Dotcom's last bail attempts, it has been confirmed that the US does have extradition treaties with two countries he is a citizen of, Germany and Finland. That information was not known when the earlier bail decisions were made.
Judge Dawson said the onus was on the Crown to produce evidence Dotcom had financial resources to help him to escape.
"A suspicion based only on the knowledge [Dotcom] is wealthy is not enough."
He said the most significant change since the first bail application was the passing of time. "Since that time, all known assets have been seized and are unavailable for Mr Dotcom's use or disposal ... [His] submission that he has not concealed any assets or bank accounts has largely been borne out."
The presence of a black bag containing two passports and bank cards close to his bed when he was arrested was not seen as evidence he was a major flight risk, as the Crown claimed, because he would have taken it with him to the safe room he fled to.
Instead, Dotcom claimed he liked to keep them all in one place because it was convenient. "That he did not take the bag with him tends to support his explanation."
The FBI wants to extradite Dotcom and three associates to the US to face charges including conspiring to commit racketeering, conspiring to commit money-laundering, copyright infringement and aiding and abetting copyright infringement.
As he left court yesterday, he said it would be good to be back with his family after being away from them for a month. "I'm relieved to go home and see my family, my three little kids and my pregnant wife ... I just want to go home."
Asked how he felt about his treatment by authorities he said: "It felt a little bit like an audition to American Idol."
