No, it hasn't been the case. The group in question, Collective Shout, has been pressuring Mastercard. Not Mastercard Australia, not Steam Australia: it's a concerted action to take down things they don't want. It's not a one time thing either: sex workers have been under attack by similar extremist catholic bigots. Furries, porn, anything they see as deviant is being attacked. And MC/Visa are happy to help.
Do I mind that MDMA Date With Hitler was taken down ? No, I don't believe it's a massive loss. However, the way it was done, through payment providers threatening to shut off access to the entire payment system because of their rules, is incredibly dangerous to the whole world.
This so much. The problem here is not the content that was blocked, it's the completely unaccountable process that was used to block content worldwide bypassing any legal protection.
Steam Direct didn't update their policy on game content from what I see. Doesn't looked like Steam fought back. Seems as though Steam has never supported games with rape, incest, child exploitation, etc.
So what? Steam simply didn't want to start a fight with its payment providers over some niche content. The problem is that this incident has proven it's possible to ban whatever content you want, globally, by pressuring middle management in Mastercard and Visa.
"Steam simply didn't want to start a fight with its payment providers over some niche content."
Or the content was never supported by Steam, per their policy. You can check Wayback machine for support for my position. Dod you have any evidence of Steam's motive otherwise?
I don't think inferring causality here is far fetched. They were fine with the content before. And we know it because said content was banned in some countries (including Australia) to comply with local regulations, so they clearly knew what the games were about.
Given that fact we have two options: either they decided to change their approach to content moderation and remove games that previously passed all their checks, with these games being coincidentally the same that were requested by Mastercard; or they decided to remove every game requested by Mastercard regardless of Steam's own policies.
Content which already violated the policies of MasterCard and Visa. All Collective Shout did was bring it to their attention.