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I ...tentatively.... agree that Amazon has the right to sell what they want and pull what they want from their store.
The problem I see here is twofold. 1) Customers bought books secure in Amazon's promise that Amazon would keep them in the cloud, and Amazon broke that promise.
I would be, kind of, okay with this if Amazon refunded the money for the books, but they didn't. And a customer service rep being rude to a customer for buying a book that the company sold is, at the very least, lousy customer relations. Hopefully the manager is having a quick chat with the customer service reps even as we speak... but it would be nice to know that.
2) Amazon is not being clear about what content it, for lack of a more convenient word, censors. The upshot of this is that authors who want to sell at Amazon must censor themselves. And not knowing exactly where the line is drawn, and given the amount of effort required to re-write a book to make it more acceptable, they will generally err on the side of caution, so they must censor themselves more harshly than Amazon itself would censor them.
Now I don't care about incest erotica one way or another, but it's the principle of the thing. Will an investigative reporter three years from now write a book about how Wikileaks release of information led to public outcry that cleaned up behavior that had festered in the dark for decades? If she thinks Amazon won't sell it, and as I recall, Amazon recently quit working with Wikileaks, so I can see why she would be worried, maybe she'll put that year and a half of effort into something she knows Amazon will sell, like oh, fixing horse races or something.
Amazon is a major market. When authors have reason to worry that a major market might refuse their book, thus depriving them of a big chunk of possible revenues, whole fields of inquiry could potentially dry up to a trickle.
Now hopefully this won't be an issue--but putting the pressure on Amazon to sell even stuff that might not be widely popular can help keep it that way.
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