Blizzard threaned them and they decided to back down and give blizzard a chance for the perfect solution which would be Official Legacy Servers. They could have choose to fight back but they didn't. It's fairly easy for them to not get shutdown, like moving the server to a place like Russia where it would be impossible for Blizzard to shut them down.
if it was that simple pirate sites wouldn't keep getting shut down.
also as long as they live in a country blizzard can go after them they will, they don't have to target the server just the person, most people back down as soon as they get the warning as they know the millions blizzard can pump into a legal case would bankrupt them before they could even get to court. it's why a gold seller or private server has never beat a large firm as in the end it comes down to money and a massive company will always trump some random people.