While I appreciate the shut down of illegal activity, I am wondering what legal principle allows the domains to be awarded to Microsoft as opposed to being taken over by the government.
Next thing that happens is that they will catch the perps and lend them to Microsoft where they will be chained to a desk, fed only junk food and coffee, and forced to code for the rest of their lives.
"Awarded" to Microsoft? There's no government control of the domain naming system. ICANN oversees everything related to domain naming. Microsoft made both a technical and legal case to ICANN to overtake these domain names.
It's no different than if an organization sues a scammer who buys a domain with 1 letter different from the legitimate business and tries to masquerade as them. Think WhiteHouse.com from a few years ago.