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What got them in hot water and the publishers (who were watching IA like a hawk and wanting to fuck up CDL by doing it their way (see how streaming became a joke when everyone had their own services)) on their asses wasn't just Chuck Wendig, but rather lifting the limit during COVID.
If they had not done this, they could have continued to say fair use. To some industry bought judge, they are literally no different than libgen, IA was only allowed to get away with what they could for so long from being low profile enough. A lot of people in the preservation sphere have privately said the same thing about this in Discord groups, that IA was going too high profile and picking the wrong fights.
Furthermore their actions during the KF saga and COVID scares have also burnt supporters and don't get me started on the elephant in the room known as Jason Scott (which I won't get into), as one guy I know said "meh I could care less after they catered to whining women online".