Amazon should own up and pay. They have effectively stolen from this author. No, we can't guarantee that those people would have bought it for free, but if these were physical books, the law would require that they pay the author. The agreement wasn't that they get to change the price any time they like. The agreement was that they get to match competitors. They violated that.
"If these were physical books", there would be a material loss involved: Publisher A paid to produce X books, the distributor lost part of them, and now the Publisher cannot sell them anymore, suffering a direct and quantifiable economic loss. Here, it's more like the distributor left their books around in a library, and some people got to read them for free. The publisher can still sell them. There is no direct loss…
I would say it's more like some people walked out of the library with them. The author most certainly did lose something: sales.