In my startup we use mostly linode and handle a lot of volume. I have a few VPSs and some dedicated hardware for specific tasks. Monthly bill roughly 200-250USD all included.
The other startup used the AWS free credits. Got extra credits and lived it up. Adopted Kubernetes and all the big AWS stuff. Brought in a few devops professionals. All super smart people.
Monthly spend 7kUSD on traffic/usage that's actually much smaller than the one I have with my startup. Availability is roughly the same (if anything, my startup has better uptime).
So yes, this is an Apples to Oranges comparison. I get that. They can better scale in theory etc. But if they pay 7k right now, I can't imagine how expensive it will be when they scale.
They started just using EC2 but slowly got roped into AWS services so now they have no vendor neutrality and no viable/easy way to reduce these costs.
If you need 'some random compute and a bit of networking' then no, do not use AWS.
Vendor neutrality isn't worth match to a business unless you are the EFF or intend to move vendors all day long.
You don't need AWS or any other cloud for volume (traffic volume, that is), heck I'd say stay away from the clouds for volume since that is where the bulk of your money disappears anyway.
If you have less traffic then you should spend less.
This sounds like they don't have anyone who actually knows what they are doing, or did any form of cost/benefit analysis which will always mean you spend more than you should.
You generally pay for what you need and for what you can afford. If you don't need AWS or you can't afford AWS, it wouldn't make sense to use AWS. That goes for in-house software development, infrastructure management and pretty much anything else too...