https://en.wikipedia.org/wiki/Digital_rights_management

DRM technologies[4] include licensing agreements

The ones you agree to when you install the game, like CD Projekt RED's EULA.

https://store.steampowered.com/eula/1091500_eula_0

I assume this part, at least it's the first one that gives them an excuse:

Don’t create, use, make available... software that interact with or affect our Games and/or Services in any way (including any unauthorised third party programs that collect information about our Games and/or Services by reading areas of memory used by our Games and/or Services to store information).

The DMCA allows the hosting service to be exempt from any legal damages if they follow up on DMCA takedowns. It would take winning or losing a lawsuit to determine how valid or invalid the argument is, not winning or losing an Internet argument, so I can only point out why it's possible.

There are a lot of people abusing DMCA takedowns on YouTube, have you not heard about it before? Look up copyright trolls DMCA on YouTube if you want more info on it.