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Why do you assume IP Addresses are private? Steam can't hide it when you connect to servers... unless they force you to use Proxies, which would add latency to your connections and slow your games down.
They're not necessarily worried about servers knowing your ip address; players, on the other hand, have no need to see ip addresses, and that is a valid privacy concern.
That's bizarrely rediculous. It means that if you have DHCP I 'stole' your IP address when its lease renews? Well lock me up and throw away the key!
I really doubt that. Any server, website, person, you connect to, has your IP Address. It's not up to them to hide it for you. If you want to show me the law, I guess I'll beleive you, but if it exists it's a very ignorant law.
they protect your identity.
I'm not interested in opinions and articles though. Only real law. Many people think many things, doesn't give them much if any weight.
Treating IP Addresses as personal information may work in the sense that "Steam can't tell them your IP Address" But you are choosing to connect to a website, forum, game server, etc, that is you giving them your IP Address. The same as if you ordered an item and told them your home address to deliver it to you.
Steam's not handing out your IP Address. So... no problems.