What actually happened was a legal back and forth.
“First things first - Nintendo did not send Valve or Dolphin a notice against our Steam page,” the team clarified in a recent blog post, before adding that “Nintendo has not taken any legal action against Dolphin Emulator or Valve.” Now the team have cleared up the situation and are “abandoning” their efforts completely. Back in March, it was announced that the long-running emulator would get a surprise release on the storefront, but that was soon “indefinitely postponed” due to legal troubles with Nintendo and Valve.
The GameCube and Wii emulator Dolphin will no longer come to Steam.