Short summary: the Libyan government, which owns the .ly TLD, doesn’t want foreign and/or objectionable companies owning prime short .ly domains anymore, and has already banned a couple prominent ones without warning.

I was wondering when this bomb was going to drop. We’re affected by it at Posterous too, with our post.ly short domain.

If you’re building a business, you need to choose your partners carefully, especially when you’re going to need to depend on that partner. Bit.ly chose to partner with the Libyan government. Fortunately, at Posteorus, it’s not the world’s biggest dependence, but it’s something we’ll probably need to handle at some point.