From day one, we've prized security, transparency, reliability, and openness at bit.ly. Along the way, we've made a number of product decisions based on those tenets. Among those are link permanence (link destinations don't change once created), the avoidance of anything that interferes with user experience (we've never framed, nor will we), and a dedicated focus on spam and malware detection, so that our users can click on bit.ly links with a high degree of confidence.
We take our responsibility as internet citizens seriously, and you'll see this exhibited even in the small details of the ways in which we manage flagged links (you'll notice we never actually disable a redirect, and at most simply insert an interstitial which retains the end destination link).
In the course of analyzing content for spam, malware, and phishing attacks, we rely on a number of systems, both internal and external. Over the course of the past year, a number of spammers have attempted to use various levels of indirection through redirectors (some of which are reconfigurable), in order to obfuscate and cloak their efforts. In fact, the bulk of shortens to bit.ly coming through other URL shorteners have tended to be attempts to spam the system. While our crawlers do of course follow links through redirections, the inclusion of modifiable redirects in the stream, and our analysis of the preponderance of spam attempts via these vectors have made it necessary and appropriate in some cases to block the URL shorteners.
Just to reiterate, the only goal is and always has been to protect the end user clicking on bit.ly links, regardless of the link source. Given that multiple layer wrapping of URL redirectors tends to be an edge case based on inappropriate API usage, confused users, or in the preponderance of cases, attempts to spam, we think this has been a fair approach. As such, you'll note that we did in fact update our interstitial warning pages with language better reflecting the reasoning behind the status. We're happy to see a healthy, vibrant, shortening ecosystem, and have no intention whatsoever to put a damper on other sites in the space.
Some have suggested we simply not shorten URLs already pointing to 3rd party short URLs. While this is a potential possibility, our API responses and the innumerable clients and scripts that use these methods aren't currently designed with this state in mind. Consequently, any changes would have to be carefully considered.
As with any product, bit.ly is a work in progress, and we're always interested in finding ways to best serve our users, while maintaining the integrity and openness of the product.