Sweeney Blasts Steam's AI Label as a 'Scarlet Letter'

Twenty percent. That's the share of games released on Steam in 2025 that disclosed using generative AI, according to recent data, an 800% increase from the year before. It's a number that explains why Epic Games CEO Tim Sweeney is so agitated about Valve's policy requiring that disclosure in the first place.

Speaking to PC Gamer during a wide-ranging interview at Unreal Fest Chicago last week, Sweeney didn't mince words about Steam's AI labelling requirement. "If you want to launch a game, and get it as widely publicized as possible, you've got to put it on Steam so people can wish list it, and if you want to play it on Steam, then you have to get this Scarlet Letter of AI attached to your product, and now there is a hater community trying to kill the game," he said. He called the policy "really irresponsible" and argued it forces developers into an impossible choice: skip AI tools that could make them competitive, or slap a label on their game that invites a boycott.

Sweeney's Blind Spot

Here's where I struggle with this argument. Sweeney frames AI disclosure as a punishment, but transparency about how a product was made isn't a scarlet letter. It's information. Players deciding they don't want AI-generated content in their games is consumer choice working exactly as intended. Valve isn't editorialising; it's labelling. If a meaningful number of players see "uses generative AI" and walk away, that's feedback the industry should be listening to, not suppressing.

Sweeney also can't pretend he's a neutral observer here. Epic Games Store is Steam's direct competitor. Every friction point on Steam, every policy that makes developers think twice about launching there, is a potential advantage for Epic. He didn't mention whether the Epic Games Store has its own AI disclosure policy, or plans for one, and the omission speaks volumes. Sweeney made them during a media tour promoting Unreal Engine 6 and its deep AI integration. Epic is betting heavily on AI as a core part of game development going forward, from its new programming model to tools designed to speed up content creation. A world where AI labels carry stigma is a world where Epic's pitch for UE6 gets harder to sell. His frustration with Valve's policy philosophical; it's commercial.

None of this means Sweeney is entirely wrong. There are legitimate cases where AI assists in development in ways players would never notice or care about, like QA testing or procedural generation, and a blanket label doesn't distinguish between a game that used AI to generate placeholder textures during prototyping and one that shipped with an entirely AI-written script. Valve could be more granular. But the solution to an imperfect transparency policy is better transparency, not less of it. Epic laid off more than 1,000 employees in March following a downturn in Fortnite's financial performance. If Sweeney wants to talk about what's actually irresponsible in this industry, AI disclosure labels wouldn't be my first pick.