The biggest problem with backups is the effect they have on online cheating. I think Nintendo does a good job cracking down on hackers though.
Other than that, I don't see this as a big deal. The number of people who go through the effort to mod their system to play free games are quite minuscule in the Switch's main markets (if we were talking about developing countries, that's a different story.)
Play backups on the DS was a very different. All you needed to do was buy an flash cart, and you were good to go.