Yes, many people find value in being locked down with a single cloud provider. It can make sense, but sometimes you don't need the AWS ecosystem and just need an online server.
Perhaps you have other stuff on AWS, in a VPC, that is administered by an operations team which is several tickets away from you and/or you have to talk with seven layers of management before you convince anybody that a VPN peering with a cloud provider may be cheaper than the hours you just wasted with expensive meetings just used to discuss the possibility of setting up a VPN peering let alone actually executing it and maintaining it...
Yeah, many companies will gladly pay an inflated per instance price as long as every else flows smoothly
I'm assuming there are no data transfer fees. If your M1 workload needs significant data, that alone could make it cheaper than having a cheaper external M1 and then paying every time you move data out of AWS into it.