Like it’s a pseudo-public file storage system. If you’re not going to put up the moderation effort and block the spread of malware, cp, phishing attempts, and spam then the people who would get kicked off of, say Dropbox, will migrate to your service and now you’re the company whose links are inherently sketchy.

It’s not really a moral panic so much as it’s damaging to Mozilla’s reputation.

You're missing the point. Dropbox isn't E2E encrypted. Send was. The technology is E2E encrypted file transfer via a central server.

It doesn't matter whether the response is due to a moral panic or an attempt to protect their reputation. The end result is the same - reduced public availability of <insert technology here> while the bad guys generally continue using it the same as before.

The parent comment had a good point, though: trust. If you run a public file sharing service, trusting a link shared through it becomes hard if it's overfilled with phishing and virus-laden fakes pretending to be legitimate things. Often you don't want the risk as a user, and definitely you don't want an association with a cesspool as a brand.

Until trust is solved, running and using such a service remains problematic. It needs not be solved via content inspection, though; if I could verify the sender, I won't care about phishing links (and such links would cease to be useful for scammers and disappear). But this is a separate significant undertaking.