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Makes it faster, reduces complexity and would allow them to reduce prices too

Pricing is set by markets based on competitors' offerings. Reduced costs could simply result in monopoly rents.

reduces incentive for them to raise prices

And reduces chances of outages... which is good for both customers and AWS.

Do they not charge for network costs anyway?

A more optimistic view is that this allows them to provide a better service.

They charge for data transfer. They don't charge based on the level of complexity needed for their internal network operations.

Everything is a tradeoff.