The row started on social news site Reddit after someone reverse-engineered the software Valve uses to spot cheats.
Screenshots of data logged by the software suggested Valve was building a list of every website players visited.
Valve boss Gabe Newell said it did grab data but only in a very small number of cases to help ban those people who used specially-written cheat software.
In the post that kicked off the row, a Reddit user, called theonlybond, posted images taken from a discussion thread on a separate site dedicated to hacks and cheats.
The Reddit post claimed Valve's Anti-Cheating (VAC) software was looking at the record every Windows PC creates of the sites its users have visited.
The post claimed that web records were being sent to Valve, fuelling speculation that the game maker was intruding on the privacy of players.Pay to cheat
In response to the speculation, Mr Newell posted a statement to Reddit to explain what was happening with the system Valve uses to stop people cheating when they play Counter Strike, Team Fortress 2 and Dota 2.
Mr Newell said that Valve's anti-cheat system looked at that Windows log for the names of servers known to be used by people and groups that sell cheats.
These servers check that a person has actually paid to use a cheat.
Only if a PC was spotted contacting one of these servers was information passed to Valve, said Mr Newell in his message. The data was passed to Valve so it could then ban a player.
Some 570 people had been banned by this server-checking system, he added.
Cheat makers had now moved on from using this server-based system, largely because Valve had tackled it, he said.
In the closing sentences of the message, Mr Newell categorically denied that Valve was gathering information about where people go online.
He added that it was in the interest of cheaters to throw doubt on the trust people place in Valve, as that would help them get more customers.
"Is Valve using its market success to go evil? I don't think so, but you have to make the call if we are trustworthy," he wrote. "We try really hard to earn and keep your trust."