I really don't understand it. - Content was used to spread malware/illegal content - It was not profitable How are those two things something you find out after the fact? What was the reasoning for launching the product in the first place?
And couldn't they have added a malware scanner to deal with the problem directly?
As for illegal content that's true with any private communication but maybe DCMA or similar got involved. I can accept that fighting for private large file transfer detracts from the main goal.