Just to be clear, this is about the "Report Abuse" button. This page lists categories of things that, if someone clicks on "Report Abuse", Google may decide is indeed abuse, and take action. So this does not apply to private files, but to files for which someone with access to the file decided to complain. Note the page title, and that it says:

> After we are notified of a potential policy violation, we may review the content and take action…

There are a lot of comments here. Many may indeed hold the opinion that even when someone clicks on "Report Abuse" for a file being distributed via Google Drive on the grounds of "misleading content", then Google shouldn't take action like "restricting access to the content, removing the content, and limiting or terminating a user’s access to Google products". That's a valid position, and legitimately a criticism one can hold, and this discussion makes sense. But there are also quite a few comments imagining this to be about Google proactively scanning everyone's private files, so just making this clear. (The submitter probably understands the distinction as they put "distribution" in the title, but clearly, some comments do not.)

(Disclaimer: I work at Google but just posting as myself; have no special information here but this is just my obvious reading of the page.)