1. They didn't tip the authorities but the "national center for missing and exploited children" which in turn tipped the authorities: http://www.khou.com/story/news/crime/2014/07/30/houston-man-....
2. It happened before (and thankfully it will happen again) most online services employ this detection against a centralized database run by Microsoft: http://www.microsoft.com/en-us/news/features/2009/dec09/12-1... and such action is covered in the TOS.
3. The NSA comment is bunk, don't make martyrs of child molesters. As a father I'm very grateful to this sort of system.
4. If a story is reported on in a source other than Businesses insider, it would behoove you to post the other source instead.
5. Dupes: https://news.ycombinator.com/item?id=8128951 https://news.ycombinator.com/item?id=8125039 https://news.ycombinator.com/item?id=8128687