In the real world this would be the equivalent of a corporate dispute or state dispute that would shut off entire cities, states or countries because one business within it is problematic. These are massive overreactions that probably hint to some baby steps to larger moves such as dividing the internet and competing internets.
I can guarantee you the engineers and product people aren't calling the shots on this one. It is oligopoly level business and authoritarian state leaders.
I think you are taking this too far. Twitch is a big but still a private platform. Basically it is the same age-old struggle between platform owners and copyright holders - the former claim that they aren't responsible for any content published on their platforms while the latter claim that they are.
Overestimating preserves ground gained, rights and freedoms and is an offensive. Underestimating cedes that and is a defensive position. Power grabs and authoritarianism cannot just be defense, while they are on offensive offense, you have to go on offense to get them on defense.
Underestimate overt and subtle power grabs with greater goals in mind and end up like this scene from Monty Python and The Holy Grail [1]
I'm not saying that I condone what's happening right here, but if the nationalities were flipped Twitch would've had their domain taken away world-wide and have to play a game of domain whack-o-mole like libgen currently does.