If they make their own distro, though, they're not really gaining more control. They're just enabling even more choice for someone who's looking for alternatives.

Let's say, hypothetically, that Valve releases SteamOS to the general public, and it's received generally well, and it becomes much more common for people to use "that Linux thing" than it is today. Then let's say, hypothetically, that Valve turns evil and... I dunno, starts charging money for updates? At that point you've got a large population already using Linux, I'm sure there would be a pretty big migration to Ubuntu or some other mainstream Linux desktop.