Digg Founder Kevin Rose posted this response last night:
Today was an insane day. And as the founder of Digg, I just wanted to post my thoughts…
But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be.
If we lose, then what the hell, at least we died trying.
Digg was basically caught in a no-win situation. Remove the post and face extinction by having your users revolt and leave or face a potential lawsuit from an organization with very deep pockets. Win or lose you have to admire digg's stance.