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Daily Mirror editor says to forget about SEO
Another case of someone planning a service based mainly on PREVENTING 5% of the "bad" people from doing questionable stuff, rather than ENABLING the 95% of "good" people from actually, you know, getting something useful :p
(cf. DRM, etc.)
Having said that, expect Microsoft to continue to push new things in this space over time.
I was actually pleasantly surprised with Microsoft's decision - it is not much but it is better than what they have done in the past. However, my preference is for either Xdrive or Box.net