Fundamentally, it has given control over the DNS records to a different country (.me == Montenegro).
It's training people that really, any domain could be a government domain, you'll never know.
Welcome to the neoliberal wet dream.
It's the company providing the service that the government could provide on its own, but that service is being provided by a private company through a lucrative contract agreement.
Yes, it's unfair that the US gets naked .gov - but that doesn't preclude the rest of the world from doing the right thing, and it certainly doesn't excuse the US government doing the stupid thing.