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What would you've done if you were in charge of itch.io? Take it to court? 

I'm sure they would have very little chance of winning if that were the case.

If Valve, the one with the resources to put up a fight against it, is unwilling to do it, I don't think any other store page will. It's a lose-lose situation no matter how you look at it unless the law changes.

The best thing to do is leave this site and hope it collapses. It doesn't matter why itch.io made this decision, what matters is making sure they suffer for it.