In this case not even a cease-and-desist was needed. Just seeing 1.7M peers crying out in the void for company was enough. Living in a country overly friendly with Hollywood and its money, I do understand him.
Yes, prime example of a chilling effect where the fear of a lawsuit stops people from engaging in perfectly legal activities. It's unfortunate that copyright law does not concern itself with collateral damage like this.
I think the point is that you can't count on that and need to assume that you are going to attract actual lawsuits. DMCA provides easier take down options for copyright owners but AFAIK does not compel them to make use of those options before going to court.
I think companies will try with a strongly worded letter first, as this would save them money over straight going to court. But I get that the risk may not be worth it for many people, I myself would be very scared if I received a letter threatening a lawsuit for a ridiculous amount of money, even knowing that they are exaggerating the scale of damages just to scare me.
Considering the obscene fines courts have granted the media industry who claim losses with zero basis in reality it's only to be expected. Would you be willing/able to defend your customers when faced with billions in fines and a court system that has been aggressively favoring your opponent?