UPDATE: Nintendo of America has also released a list of FAQs about Switch Online. This includes a slightly different explanation as to what happens to cloud saves after a person’s Switch Online membership expires. According to NoA’s answer, it appears that data will be retained in the cloud after expiration, but after an “extended period of time” there’s no guarantee it will remain there. This is a pretty vague answer, but it does suggest that the data will not be outright removed the day that a person’s membership expires. Hopefully, a more definitive answer will be given soon.
ORIGINAL STORY: If you’re happy to finally have cloud save backup functionality when Switch Online arrives next week, then you should definitely be aware of this clause.
Nintendo has posted a list of various FAQs as it relates to how Switch Online will work. One of the questions deal with how long backed up save data will remain in the cloud after a person’s Switch Online membership expires. It turns out that as soon as your membership expires, all of the backed-up data will be erased. This even includes data from the NES Selection that’s included with every Switch Online membership.
The one saving grace is that all of your save data will remain locally on your Switch untouched. But, should something happen to your system before you renew your membership, all of that data is in danger of being lost forever.
Q: After my Nintendo Switch Online subscription expires, will my Save Data Cloud files and Nintendo Entertainment System – Nintendo Switch Online save data be erased?
A: Save data stored with Save Data Cloud cannot be kept outside of the duration of your Nintendo Switch Online membership. Nintendo Entertainment System – Nintendo Switch Online also uses the Save Data Cloud, so the same applies. However, if you keep the Nintendo Entertainment System – Nintendo Switch Online save data saved locally on your Nintendo Switch console, then you can use it again if you purchase another membership.
On paper, disabling a feature of a paid membership when that membership expires may sound logical. But, in this situation, that’s not really the case. If you happen to go an extended period of time without renewing your Switch Online membership, that means your save data is at risk of being lost forever should something happen to your Switch itself. The whole reason of having the cloud save backup feature is to keep the data safe. So, Nintendo is essentially forcing you to continuously cough up the funds in order to have access to such a crucial feature.
Sony also charges PS4 users for cloud save backups, but users get to keep their data in the cloud for six whole months after their PlayStation Plus memberships expire. Microsoft has the best deal out of all the platforms by offering cloud saves for all Xbox One owners completely free of charge. Thus, Nintendo is really looking like the amateur in this situation. One can only hope this policy will change in the future.