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The fact that Google is scanning your files for "copyright infringement" is bad enough. They have no way of knowing that you don't legitimately own something. Then pair that with this example and if that isn't enough of a deal breaker for using Google drive I don't know what is.

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I had no idea that Drive isn't just a disk drive in the cloud. I've always treated it as such.

Do they all do this? OneDrive, Drop, etc.?

I believe this is only for accounts with sharing on. Otherwise, there is no infringement

Exactly, I was surprised by the lack of outrage at this.

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