This is really wrong. IMHO the US government is overstretching into an area that it shouldn't. This whole idea of using the fact that one machine/component of a particular service sits in the US as an excuse to hijack that service is really flawed. Information does not know borders, it should be dealt with at an international level.
For example that whole thing with the MS cloud saying they would have to divulge info about its EU users to the US, that's pure insanity.
Regardless, those breaking copyrights will just move to a .ca domain. I personally am welcoming them and will keep watching South Park online for free (Google it).