Why are these service providers being punished for what their users do
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maybe I'm just being naive?
In this case, the comment does strike me as naive.
Back in the 1990s the tech community convinced itself (myself included) that Napster had zero ethical responsibility for the mass piracy it enabled. In reality, law in a society is supposed to serve that society. The tech community talked itself into believing that the only valid arguments were for Napster. In hindsight, it's less cut-and-dry.
I have never believed E2EE to be viable, in the real world, without a back-door. It makes several horrendous kinds of crime too difficult to combat. It also has some upsides, but including a back-door, in practice, won't erase the upsides for most users.
It is naive to think people (and government) will ignore E2EE; a feature that facilitates child porn, human trafficking, organized crime, murder-for-hire, foreign spying, etc etc. The decision about whether the good attributes justify the bad ones is too impactful on society to defer to chat app CEOs.