The average American consumes far more sugar than he realizes. Bear in mind that 12 grams of sugar per serving is the equivalent of
4 teaspoons. Scoop 4 teaspoons of sugar into a bowl; it's a shockingly large amount. And a serving of cereal is typically 1/4 cup or so, which is, what, a third or half of a bowl? It's not like anyone eats just one serving.
"Eating or drinking 100 grams (8 tbsp.) of sugar, the equivalent of about two cans of soda, can reduce the ability of white blood cells to kill germs by
forty percent . The immune-suppressing effect of sugar starts less than thirty minutes after ingestion and may last for five hours."
You let a kid pour two or three servings of that cereal in his bowl, and he's already a third of the way to that 100 grams -- a figure that assumes an average 150-pound person to begin with, so for a little kid, it's going to take a lot less sugar to have the negative effect.
I don't see how this can be described as anything but a good thing. It's not like they're banning Cap'n Crunch or taking it off the market. They're just deciding not to brainwash little kids anymore. That sounds like responsible business practices to me.