What other choice did they have besides resisting and losing support of payment providers for all developers? I feel like the only other option would have killed them harder than you describe.
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I think people are being absolutely ridiculous in these threads to blame Itch for anything beyond how they initially handled it. It's unfair to suggest that Itch should have fought back on this matter, and it would have been an irresponsible move on their part. The whole website, and all of its developers who rely on it, should not be killed because Itch decided to stand up for a portion of its developers.
I have developer friends of whom this affects. I fear for what might happen to their games. I am angry that this is happening, but what good does it do to go after the people with the guns to their heads and not the people holding the guns?