Google Drive and Dropbox both have extensive history regarding the storage of copyrighted content which basically boils down to storing it is fine, sharing it through the platform is not. This is even in their policies.

I believe the DMCA is the same, there's nothing stopping you from possessing copyrighted content without a license, just the distribution and manufacture of it.

Plex allows sharing though. So it's a fine line. It's probably a small enough userbase, and it's personalized sharing as opposed to general p2p sharing. So it's under the radar. If it goes mainstream, Google/Dropbox will be forced to comply by the studios.

Plex is basically acting as a proxy though, so there's no way for a complainant to know that Google Drive is involved.

If the media were truly encrypted that would make transcoding at the server level essentially impossible. It would have to be decrypted client-side.

that's not even possible.

where do you want to store the encryption key to decrypt the movie and play it? In the cloud as well?

you can't store it in your chromecast or whatever..

Why couldn't you store this in your Plex account, versus on the storage medium?

Everything is routed through Plex's services, seems like you could decouple those two things quite easily while still having full encryption on the cloud storage.

In fact, if Plex really wanted this to succeed, they should have a tool which encrypts the files, synchronizes the files with the cloud provider, and then releases the keys to Plex.

Yea sorry, what i meant was encryption keys should (generally / always) be stored client-side...

encryption is a mute point unless its some sort of end-to-end encrypted thing since they host the computers.

"Moot" point, not "mute" - https://en.m.wiktionary.org/wiki/moot_point