Yeah, that's literally the entire point of federated identity. If you give an identity provider the rights to your identity, they have the ability to grant or revoke privileges at will.
If you don't like that, do your part in promoting self sovereign identity standards.
Tell me you haven't read the TOS without telling me you haven't read the TOS.
Some Amazon employees certainly overreacted too quickly by disabling this guy's services, but Amazon certainly has the right to disable an account and discontinue service for any reason not expressly prohibited by law (and this isn't one of them).
The post you're replying to was making a moral statement about what Amazon should and should not be allowed to do - not what they legally can do. The current world of "shoot first and ask questions never" on the Internet is not socially acceptable at the level of control and ownership that large tech companies have over you.
But then again, tech companies operate on one proposition, to wit: that there are certain parties that the ToS protects but does not bind, and that there are certain parties that the ToS binds but does not protect.