AWS is a growth business, in a competitive space, so (particularly given their overall history) it seems unlikely they will increase margins if it could risk adoption.
Of course, in the "long term" (whatever that means), the market and shareholders expect to reap vast profits, and price that, along with the company's free cash flows, into the stock.
However, my personal thesis is that Amazon specifically is a bit of an anomaly in this regard: it seems unlikely to me that we will see any strategic shift in pricing from basically any Amazon-owned entity in our lifetimes -- the culture is too ingrained towards a strategy of complete and utter dominance over all markets, margin reduction being a key tool in the toolbox. So if I were to bet I would say pricing power is pretty low on the list of concerns of AWS lock in -- more concerning are things like unexpected conflicts of interest as Amazon eats the world (see also: Netflix), operational dependency (ultimately, you rely upon AWS ops' competency for your uptime, security, etc), end-of-lifing of services you depend on, opportunity cost vs other vendors who may offer better services, and other unknown unknowns.
Certainly there are other concerns--no argument there.
That said, Amazon Prime prices just went up 20%, so Amazon will clearly raise prices if they think the market will bear it.
Moreover, "complete and utter dominance" sounds like a monopoly. It's difficult to think of a monopoly that didn't raise prices and/or decrease service once they were established. I would not start a business on Amazon without assessing the risk of tying my fate to a single large vendor, for cost as well as other reasons you cited like Amazon deciding to compete with you.
Of course, in the "long term" (whatever that means), the market and shareholders expect to reap vast profits, and price that, along with the company's free cash flows, into the stock.
However, my personal thesis is that Amazon specifically is a bit of an anomaly in this regard: it seems unlikely to me that we will see any strategic shift in pricing from basically any Amazon-owned entity in our lifetimes -- the culture is too ingrained towards a strategy of complete and utter dominance over all markets, margin reduction being a key tool in the toolbox. So if I were to bet I would say pricing power is pretty low on the list of concerns of AWS lock in -- more concerning are things like unexpected conflicts of interest as Amazon eats the world (see also: Netflix), operational dependency (ultimately, you rely upon AWS ops' competency for your uptime, security, etc), end-of-lifing of services you depend on, opportunity cost vs other vendors who may offer better services, and other unknown unknowns.