What Parler was, was bad for business. It's not a good look for AWS to be hosting websites with violent content linked to the Capitol insurrection, and apparently doing nothing about it. So they pulled the plug.
The elephant in the room is Facebook. There's lots of evidence they were the most directly responsible [1]. Parler wasn't bad for business but scapegoating it was good PR.
Facebook quite possibly was more responsible because they're more popular. But they also appear to be a actively fighting the misinformation that these groups spread and thrive on.
Whereas Parler is the opposite: they practically celebrate how little they care about undermining democracy with misinformation.
Actually FB let it fester and didn’t do anything about it until recently. Sure, Parler exists to provide this needed freedom of expression to extremists and does not represent what it is but in terms of impact, FB has had a lot more and did nothing about it
Only bad for business because of political dealings. The AWS name was not associated with Parler.
In my view, the more likely actual reason for the cancelling of Parler, as well as for their seemingly excessive hardware requirements, is that Parler wants a shot at competing with Twitter for real, and has convinced their investors that is possible. The latest chaos must be one of the best free marketing anybody in their line of business could hope for.
If realDonaldTrump moves to Parler, and some popular republicans already have, that would potentially bring in a floodwave of new users, and risking that kind of business opportunity by having underpowered servers would be professional malpractice.
Parler is also likely to face months-long DDOS attacks.
The AWS name wasn't associated with Parler and the Capitol insurrection, but it likely would have been. This is all about getting ahead of the story and limiting any potential brand damage.
It's similar to when Cloudflare booted 8chan, after the latter was linked to the white nationalist terrorist attacks in Christchurch and El Paso.
I don't understand the rationale for your view. Why would slapping down a potential Twitter competitor be any concern of AWS?