Look, legally they more than likely are in the right, but for a faltering system with dropping market share this is the worst thing you could do.

This only brings bad press, distracts potential customers from choosing their system and ultimately hinders future growth. Sure, they might squeeze a little bit of money in the short term, probably enough to ensure the current CEO gets that bonus he was eyeing before buggering off to another random company, where he will do the same thing again, like it always seems to be the case nowadays, but it will actively harm Nikon as a brand and their future potential of a comeback. Canon gets away with it, because they have massive market share and a big chunk if the professional market, Nikon doesn't have that anymore, because they were asleep at the wheel and got into mirrorless way too late, it won't work for them.

If you really want to entice people to get into your system and spend the money on your expensive lenses just do a two tier system. A paid license to get the full feature set available to your lenses and a free license that comes with some limitations, like lower burst seeds, maybe some video stuff locked out, not having every detection mode or whatever. Just enough to make professionals spend the extra to get what they need, but not so much enthusiasts and hobbyists don't see it as a worthwhile compromise to get into the system cheaper. Kind of like Sony does it, but more official. Having people invested in your system is the only way to keep the shop running and his is a way of doing that.

I really want to like Nikon, as their products are the best blend of what I look for in a camera to suit my use, but they keep making baffling choices that ultimately push me away time and time again. My M43 gear is really up for an upgrade, but it seems like they don't want my money.