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Here it comes - Reddit admins taking over subs
(lemmy.intai.tech)
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Even though it was ethically very bad, it was legal. And Reddit had a policy of not removing content, unless it was illegal or doxxing.
The fact is that they wanted to follow the same principles as the government, and allow complete freedom of speech. And if you are following freedom of speech, the ethicality of content is irrelevant.
Reddit never approved of r/jailbait. They simply allowed it.