What you are advocating for here is the opposite of a free market. Two independent parties contracting with each other and agreeing to a most favored nation clause without government intervention is a free market: either party may choose to leave the relationship. The government stepping in restrict parties’ ability to contract as they see fit is a restraint on the market.

In a free market sellers will leave the Amazon ecosystem and move to a platform with less restrictive agreements, resulting in lower consumer prices (albeit with less availability). That’s exactly what GP is arguing. Obviously GP believes in a free market.

Amazon’s belief in their own market power is irrelevant.