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Looks like exactly the damned if you do, damned if you don't scenario that everybody predicted with fosta/sesta in the first place.
In what sense would they have been damned if they'd done, in this scenario?
The problem is that it's a basically impossible task.
The complaints described in the article seem to center around the reddit administrators directing responsibility to community moderators, who are in theory accountable to their communities but in practice are often not, and also (on the larger subs, at least) have conflicts of interest and personal relationships with reddit employees/admins. There's a decade of drama you can pick through here.

I can't speak to the actual legal merits of the case, but I think it's pretty easy to portray a narrative that shows reddit's admins couldn't possibly have expected these kinds of problems to be resolved by community moderation, and perhaps even looked the other way when their friends' subreddits were involved.

I also won't speculate on the specifics of what reddit may have implemented, but fuzzy image and video matching is a well researched area. A technical solution here is within the capability of an above average engineering team. If it doesn't exist, it's because the "let community moderators deal with non-consensual pornography" strategy is acceptable to Redddit's management.

If YouTube can't balance damned-if-you-do-damned-if-you-don't automated content filtering to a level that isn't causing outrage every month (in both directions) I don't think there is any engineering team that can. Whether it exists or not the problem still remains on every large user generated site on the internet.
This particular case was a much easier problem. A woman asked reddit administrators to remove specific naked photos of her, taken when she was 16, and they told her they wouldn't help and that she should talk to the community moderators, while inadvertently or not continuing to sell advertising next to the underage pornography.
Claims 126 and 127 seem to be the relevant ones and do not claim there was ever refusal to remove, only refusal to be the ones to proactively scan every new post and inability to ban a physical person from posting on the platform. This is why I say it's not so cut and dry simple as it's about speed and false negative rate on the content moderation not explicit refusal to remove illegal content.
YouTube’s complexities are based around audio, video and copyright. But this particular situation seems pretty clear cut to me: a banned image could be hashed, cross referenced and restricted from being reuploaded to the platform, surely?
In as much as one can make that reliably catch these images and videos for this case, slight modifications of, references pointing to elsewhere, etc and not catch significant false positives or otherwise allow abuse of the system that cause it's own pushback sure. But that's exactly what YouTube et al problem is in the first place.
Sure, you could remove them--but you can't stop the eternal reposts. That's why I'm calling it an impossible task.
> She had to "spend hours" coming through subreddits to find the offending material and report it to Reddit, according to the suit.

The complaint seems to be that the content wasn't automatically removed, and the victim had to manually seek it out (which was apparently arduous and time-consuming) and signal it.

There's maybe some stuff reddit could have done marginally better, but the only way the core problem (need to manually report bad content) could be addressed is with automatic takedowns.

Youtube's experience shows that (1) whatever system you use will have a lot of false positives, (2) the community is not happy when these false positives start piling up.

I know of two instances where the girls uploaded pictures of _themselves_ that stayed up on a very popular subreddit for years. Later when they celebrated a birthday and made a post about it, some people did the math and realized one in particular was submitting content when she was as young as 16.

I won't give her name, but one of them has a dedicated following on reddit even after her ban.

What is truly wild is these girls can send erotic pictures of themselves and be charged as an adult for distribution of underage material. The law sees them both as underage and an adult simultaneously.