I'm not clear on how this is illegal. Is it something about the EULA? Most of the big publishers force you to use their launcher on Steam.
Rockstar games for instance required a third-party account to play GTA5.
The EULA not being visible definitely sounds illegal, though. Really absurd oversight.
This is the key part, it should be BEFORE you install the update, and with "Do you accept these new terms and wish to install"
Not like it is today
"We have forced these new terms on you, and if you do not accept you lose all access to this game"
as there is no easy way to rollback to the previous version that worked