Because MS will throw any amount of losses at this to keep themselves in the game.

Plus making games deliberately incompatible with the GabeCube will be trivial if it comes to that.

Valve can throw a lot of resources behind what they’re doing, but it’s a drop in the ocean compared to what MS can spend. At the end of the day Valve can only really match current consumer pricing, and even with 16GB RAM and 8GB GPU, that isn’t cheap.