"But now, after seeing hundreds of stories and reading thousands of comments, you've made it clear. You'd rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won't delete stories or comments containing the code and will deal with whatever the consequences might be."
It's ironic that Kevin decided to take this course of action on May 1st, which also happens to be Law Day.
There is something really wrong with a "community" when it decides that the rule of law when applied to something they don't like should be ignored. Despite having earlier stated that Digg must abide by the law, Kevin has apparently changed course because too many people complained that abiding by the law should not apply to them.
I think DRM sucks and think that the way we are protecting intellectual property is dysfunctional, but the fact remains that respect for the law is a foundation of stable society and our entire economic system.
Kevin is wrong for letting a mob bully him into doing something that he knows is wrong. He's also wrong for deciding it's more important to not piss people off than it is to do abide by a law that he doesn't like. Welcome to the slippery slope.
PS - this is one more example of how companies built on community are finding that they don't actually have that much ownership of the thing they are built around.