I was skimming through it and couldn't really find any smoking gun about them missing any hard deadlines for content removal. If you take a site like Reddit, it can take days before all violent / threatening language is removed from a given thread. A lot of the content AWS uses as exhibits is borderline, so its not as simple as approve some auto filter. I am assuming Parler just took on the scale of weeks to months to fail to remove some bad stuff but it would great to see that in writing to confirm.

It would be foolish of Amazon’s legal team to make an argument like they did and not be able to back it up with proof, imo.

If Microsoft sends an email to Valve telling them to delete certain unlawful posts on Steam, or else they'll use Windows Defender to block the Steam executable, would you defend that?

Why not? It's not like Valve owns the computers of their customers. They're in clear violation of the Windows terms of service. If you violate the ToS, then Microsoft has every right to remove you from their operating system and Valve is in turn free to migrate to a different OS.