There are seven alleged co-offenders involved in the case; four in New Zealand, one arrested overseas, and two at large overseas.
Van der Kolk stood in court dressed in a grey shirt and briefly smiled at his wife and father who were waiting in the public gallery.
Crown prosecutor Anne Toohey, acting on behalf of US prosecutors, argued he should be refused access to the internet and refused association with any alleged co-offenders.
She said Megaupload was run by a small team and it would be relatively easy for him to set up a similar site once bailed with access to the internet.
She said van der Kolk, the site's main programmer and a shareholder in the company, could set up a new site through to satisfy the enormous demand of incensed former Megaupload users.
His lawyer, Guyon Foley, said van der Kolk should be allowed internet access and labelled the proposed bail terms "unreasonable".
The Auckland resident could not restart the Megaupload site even if he had access to the internet because of the time, amount of data and resources required to do so, Mr Foley said.
He said his client was being closely monitored by the FBI, and the suggestion he could set up anything on the internet was "frankly ridiculous". He also argued against communication being cut between the co-accused because three Auckland-based men involved in the case shared the same lawyer.
Batato, 38, also appeared in the North Shore District Court today but continued to be held in custody while awaiting signed bail paperwork.
Ortmann was due in Manukau District Court for a bail hearing.
Dotcom, 38, was refused bail last Friday.
Batato will spend at least one more night in custody despite being granted bail.
The 38-year-old was bailed to live with Dotcom's pregnant wife, Mona, but the court was told she was unable to provide her written consent because she was at the doctor's when bail assessors visited her address.
Batato's lawyer Guyon Foley said it was possible the assessors would be able to get the necessary signoff tomorrow, but it was more likely to be Monday.
Mr Foley proposed that his client be bailed to stay with van der Kolk and his wife after he was granted bail today.
However, Ms Toohey said she would have concerns with this arrangement given van der Kolk's role with Megaupload.
"The risk is that these men, who used to own a multi-million dollar company, now have nothing to do with their time and they would be living together."
Judge Pippa Sinclair said the matter needed to be dealt with properly and remanded Batato in custody until tomorrow afternoon.
