>Why is that sad?
because the wholesale destruction and minimization of knowledge, education, and information to appease (often arbitrary) intellectual protectionism laws is sad, regardless of who perpetrates it.
non-Google example : What.cd was a site centered around music piracy, but that potentially illegal market created a huge amount of original labels and music that still exists now in the legal sphere.
No one would defend the legal right for what.cd to continue operating, it was obviously illegal; but the unique, novel, and creative works that came from the existence of this illegal enterprise would be sad to destroy.
Swinging back to the Google example : YouTube systematically destroys creations that they feel (often wrongly) infringe upon IP. This is often not even the case, Google routinely makes wrong decisions erring on the side of the legal team.
This destruction of creative work is sad, in my opinion it's more sad than the un-permitted use of work.
Of course, Google as a corporation should act that way, but it's sad in certain human aspects.