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1. Of course they could inspect my files. That goes without saying. Just like a bank could take their key and go look at my safety deposit box.
You do make a good point though. I personally don't put data that I have privacy concerns about on those servers (Financial Info etc).
2. Deleting un-DRM'd files and reporting their customers? I have absolutely no knowledge of this ever happening. How in the world could they possibly know that my files are "naughty" simply by a lack of DRM and what in the world could possibly be in it for them? I have plenty of legally obtained books that don't have DRM. I am agog that they have the staffing necessary to sort through massive Terabytes of data to look for copyright violations.
I do suspect that the day something like that hit the news
"Company XXXX breaks customer privacy and reports them to _______ "
They'd probably be out of business as a consumer file back-up service. Customers would leave them in droves over privacy concerns. So if you do know of something like that happening do tell.
Now I do know that some file hosting places like RapidShare or HotFile will delete a file if they receive a Take Down Notice. Those are completely different types of services than Dropbox however.
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