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Yes, no one is going to run a service that hosts user created content if doing so means that they can be raided by the FBI in the middle of the night should a user find it funny to upload illegal content to a company's servers.Which that ends up in regulatory capture areas that prevent new competition and innovation.
Taken beyond digital content, making the producer of a service or good liable for what a user/consumer may do is a horrible precedent. If any crime is committed or problematic content uploaded, the user is committing the crime and responsible for the content not the whole service.
Already there are massive moderation services that are here and more coming. Is this something we really want beyond just removing content that incites violence or is illegal and taken down when notified. Trying to pre-empt everyone's user generated content and take it down is problematic for many reasons including competition and allowing smaller/medium players in the game.
Most of the systems are sufficient that just have reporting that can be removed by users if the content does violate rights rules like inciting violence, illegal content or copyright infringement.
We all know how auto AI driven or and overzealous competition falsely reporting moderation can end up with systems like Youtube's copyright strike system, essentially a harshly tunes and easily exploited system by bad actors.
We have to be very careful and it is safer on the side of less moderation and blaming users not the service. If we don't, big players already established could easily use this as regulatory capture and even stifle competition by merely uploading content to competitive services that will then get them in trouble.
Wholesale shutting down services or making the barrier to entry too high and costly with massive moderation services that amount to regulatory capture will prevent competition and stifle freedoms, instead of blaming users that are creating the problems, that is the wrong way. If we blame the services we can end up with a chilling effect on sharing ideas, information and content besides just obliterating competition.
We are going to turn the internet and freedom into an authoritarian Vogon-tastic bureaucratic Borg if we aren't careful. A hands-off system, with reporting or blocking systems for content that is offensive/illegal which are already common, is the best way. We don't want any of that Vogon poetry.
Any system of sufficient size will have bad things, you deal with those bad things individually not shut the whole thing down.
Karl Popper's take on this:
> The paradox of tolerance states that if a society is tolerant without limit, its ability to be tolerant is eventually seized or destroyed by the intolerant. Karl Popper described it as the seemingly paradoxical idea that in order to maintain a tolerant society, the society must be intolerant of intolerance.
[1] https://en.wikipedia.org/wiki/Paradox_of_tolerance