Is that comparable to the owner of a mall watching who goes in and out of which shops to decide what stores to add to the mall?

Isn't it more like the mall owner opening a clone of your store right next to yours while charging themselves no rent in order to gain an advantage, all the while promoting their own store they opened to steal your business on the ad boards situated around the mall?

Is that illegal?

> A customer of AWS has a reasonable expectation that the information it keeps on AWS's VMs are confidential.

This is where End User Agreements may be worth checking. There may be a specific clause AWS customers agree to.