Sure, just like other brick and mortar stores can refuse to give you backups of a DVD you own.
As long as the installer works offline this is just as good. It’s up to you to store it in whichever format you prefer so that you don’t lose it - hard drive, thumb drive, DVD…
If you nuke your computers hard drive with the installers of your games, or you step on your blu rays with games and break them, then you lose access to them. As it’s always been, no matter the format?
I agree with you with the fact that it’s wild, very distopian sci-fi.
However, even it this very much an ethical no-no, I’m not sure which bit is the technically illegal part.
If he were selling normal sheep, that would be perfectly legal. Nobody would bat an eyelid, despite being similar treatment to animals.
Is it the cloning that is illegal? If he were to clone a species on the brink of extinction to re-populate an area, would that be ethical but illegal?
Is the problem that he’s cloning without authorisation? Who decides whether we can bring new animals to life via cloning? Is there a Ministry of Clones that needs to authorise people to clone stuff?