This is the important bit. Files can be shared between private groups, using Mega as an intermediary, without them ever becoming indexed on the public web. Previously, files shared in this manner could still be a target of a takedown, because Megaupload would know they had them, even if nobody else did. Now Mega can make a stronger guarantee about keeping this kind of sharing "safe", because they have no idea whether they're hosting this kind of file or not.
Tell that to the valid copyright holders hosting their content on MegaUpload. Regardless of whether the system is used for legal or infringing purposes, the reality is that distribution companies have the ability to take down both when they claim some are using it to infringe. The concern for copyright holders is not the encryption per say, but the ability for big business to NOT be able to take down their legal content under the guise of a moral cause.
This is the important bit. Files can be shared between private groups, using Mega as an intermediary, without them ever becoming indexed on the public web. Previously, files shared in this manner could still be a target of a takedown, because Megaupload would know they had them, even if nobody else did. Now Mega can make a stronger guarantee about keeping this kind of sharing "safe", because they have no idea whether they're hosting this kind of file or not.