So uploading was covered in #2 in the post. #3 is the downloading/user possession aspect. I am familiar with the DMCA which would reduce the scope the companies liability for #2; however, it does compel them to be compliant which hurts users (covered in #3) and there a variety of subtle situations where the DMCA wouldn't help them. Note that google makes copies of your music (in GMusic) instead of hash matching for similar reasons where Apple secured an expensive license to do this. Certainly Bitcasa doesn't have any special deals like that. So yes, to your point the DMCA reduces liability but I maintain that it is still a potential flaw (which is what the title of that paragraph is).