You don't really have control of any of the hardware on AWS, and therefore they can track everything you do. (If they say they don't, you just have to trust them - there's never a real way to verify) If you're fine with that, then OK - but the public has been shown time and again this doesn't always end happily. So if they leak all of your life's passwords in plaintext, you have to be ok with that.

Which is exactly why OP pointed out this is where we should be headed if we care about privacy.