It seems pretty clear that you're right. What makes it hard to stomach though is that they're seriously on to something with S3 and EC2. Moral issues aside, should developers be wary of the poison spreading to the web services division that they've built their startups around?

It would make me feel better if the other shoe dropped and some other huge company released some competition for S3 and EC2 (I'm looking at you Google). That would provide some competitive protection from them screwing people over and another viable option. I would hope for a startup to fill the void, but this seems like as good a candidate as any for the type of problem where the big guys have some advantage.