Even if we assume ads are nothing more than an annoyance with $0 value, the "with ads" version may still be beneficial to Amazon. That's if people with a lower budget tolerate ads and those with a high budget don't. If they only sell the expensive ad-free version, they will lose the low-budget customers, if they sell the ad-free version at the with-ads price, they lose money from people who are ready to pay more. Ads here are just a market segmentation tool. Just like it is common for low end products to be the same as their high counterparts but with disabled features.

Can you point to another Amazon produced product where they achieve segmentation by making the same product and then disable features on the cheap one?

Prime video, amazon fresh. i believe the latter is no longer available outside of Prime. I think Prime shipping itself also counts here, given the changes over the years.

Edit: spelling