[OJFord]

You have an answer of why they think it applies in this case, but since it read to me like you were asking what the phrase itself meant (or in case it helps anyone else): it's most often used as 'arguing in bad faith' meaning wilfully misunderstanding the other party or just generally an insincere argument as a proxy or pretext for something else or with some ulterior motive.

So briefly in this case AWS does something which seems superficially good, but the real reason is to appease a law that it actually doesn't properly comply with. (Is the, not my, claim.) i.e. a good thing done in bad faith.