I checked for you. The two relevant URLS are
https://kdp.amazon.com/en_US/help/topic/G200634500 and
https://kdp.amazon.com/en_US/help/topic/G201834330I'm reproducing the relevant sections in case anyone has a bright idea. The issue is actually addressed. I've bolded the relevant part.
The price at which we sell your Digital Book may not be the same as your List Price. For instance, we might sell your Digital Book at a lower price to match a third party's price for a Digital or Physical edition of the book. Or, we might match Amazon's price for a Physical edition of the book.
4. Setting Your List Price
If you choose the 70% Royalty Option, you must set and adjust your List Price so that it is at least 20% below the list price on Amazon for any physical edition of the Digital Book.
A customer might buy your book at a discounted price that's lower than your list price due to promotions, but it won't affect your royalties.
At first, I thought I couldn't see any immediately obvious way to argue the point, but there is one. According to the second quote, the ebook list price must be at least 20% below the print
list price. Here and elsewhere, list price is whatever you've set your book price to (as in the second quote). And the language in the third quote makes clear that discounted price and list price are not the same. In other words, the language only entitles Amazon to drop the ebook price if your list price on the paperback (the one you set) is not at least 20% higher than the ebook list price. Amazon is welcome to go ahead and discount the paperback as much as it wants, but it can only reduce the ebook price based on your paperback list price, not the discounted price.
At least, all of that would be true if Amazon was following its own rules. Maybe the person you're dealing with is rational enough to listen to this argument and realized that someone made a mistake.
A lesser argument, but maybe still worth throwing in, is that the spirit of the rules (as reflected by the third quote) is that Amazon can't penalize author royalties based on discount prices that Amazon imposes. True, the language refers to paperback discounts and royalties, but one could certainly argue that the same spirit should apply in this case (or that Amazon shouldn't discount a price to make it violate Amazon's own rules). Nowhere does Amazon suggest it can discount your paperback and reduce your ebook price as a result.
IANAL--but I sometimes wonder if I was one in a previous life.