I agree that the big deal that Nintendo must be worried about is Switch emulation and piracy/leaks of new games before or close to release.
On the other hand (refuting my GP speculation perhaps), are Switch (and Switch game) sales really going to tank because pirates can run Zelda on Steam Decks? Regular Zelda fans who can afford one probably own a Switch already, are planning on buying a Switch 2 (or an OLED Switch after a price drop), and preordered the game.
This might be true, but only represents part of the sales — there are many potential buyers who are not “regular Zelda fans” and who may end up not buying the game if they can find a pirated copy.
There's very little reason to buy-into a proprietary handheld that will restrict your usage and repairability and compel you to pay the highest possible prices for games, if you can enjoy those games without that hardware.
I don't know how many consumers are savvy enough to make that comparison but Nintendo are in an extraordinary vulnerable position already - and the Switch 2 will have to contend with two future generations of the Steam Deck as well!
Do they ever find out which stores or developers are leaking the games? Maybe they should have better control over how they ship new games to stores if they insist on shipping physical media...