Amazon has always had the rule that publishers (and indie authors) cannot offer a book at a lower price somewhere else. It doesn't matter if it's in the 70 percent option or not.
That refers to LIST price, of course. The DISCOUNT price is not in the writer/publisher's control so it's allowed, though Amazon reserves the right to match it (at Amazon's discretion). The thing that is different about the 70 percent option is that if Amazon discounts a price, the author/publisher only gets 70 percent of the discount. Those who are in the old 35 percent program are supposed to get their cut no matter what the discount is.
I don't know if "free" is at all excluded from the payments to 35 percent deals. I guess this will tell us.