As Newell looked into the situation more closely, he came to an alarming conclusion: "We were f***ed." He found odd software installed on his machine. There were hidden hard-drive partitions. The network activity on Valve's servers showed uncommon spikes. When he began to check other computers, he found at least 13 that had similar software installed. Valve's security had been compromised. Racing around the office, he told everyone to disconnect their computers from the Internet. He started pulling wires out of walls, shutting down computers and effectively cutting Valve off from the outside world.
It was too late. As soon as the hacker realized that his access had been cut off he started releasing to the Internet parts of what he had been able to obtain from Valve's network. On October 4, the first bomb dropped: The entire source code to Half-Life 2 was let loose. Newell was furious, but he also didn't know if it was the start or the end of the hacker's plans. "It's not like someone hands you a card that says, 'This is how screwed you are,'" he says.
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