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I am very much against the Amazon Publishing branch, so take this post with bias, but I agree with B&N's decision.
The Amazon Publishing agreement is essentially an exclusivity agreement as far as e-Books go: only Amazon can publish the e-Book. So B&N is basically taking the lead in saying that the agreement is also an exclusivity agreement as far as B&M stores go: Amazon Publishing will be limited to Amazon's B&M outlets. (Which essentially don't exist.)
Since the real reason for going Amazon Publishing was largely for paper copies (because if you just want to publish your e-Book you can do that on your own at Amazon and other places), B&N's decision sort of nips that in the bud.
To be honest, I hope other companies follow suit, as I am VERY nervous about Amazon using their Publishing arm to create exclusivity for their Selling arm, and gods know we don't trust bust in this country anymore because that would make our Business Overlords have Frowny Faces.
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