In this case, the "problem" seems to be "we want to lazily cash in on an existing IP and you providing a better product for free on the same shelves as ours makes that difficult", with the "solution" being to agree to have the better (free) version bundled with the lesser (paid) version.
I suppose it's better than banning distribution of prebuilt executables outside Steam or suing the devs into bankruptcy (a lawsuit Atari would likely win), but at that point we're just comparing starting with a shakedown to starting with breaking kneecaps.