According to the article, Amazon wants the power to set the price for ebook edition. Amazon has other priorities besides selling your book for as much as possible, such as pushing the adoption of Kindle. So if Amazon decides that your book is gonna be a loss leader, you're stuck.
Actually it looks like you got it. Apple isn't trying to be the publisher too, whereas Amazon is. The publisher is objecting to what Amazon is trying to do.
Traditional chain: author -> publisher -> wholesaler -> bookstore -> consumer
Then he says that Amazon is acting as wholesaler to the publishers and bookstore to consumers. That would give us this:
Amazon's chain: author -> publisher -> Amazon -> consumer
What I don't really get is what's so different between that and what apple is proposing:
Apple's proposal: author -> publisher -> fixed-price distributor -> reader
The only difference I see is that apple hasn't started going after the publisher's profits (yet).
What am I missing here?