Go through the whole process, and then when they give you the contract, ask for an exception, then if they don’t grant it, withdraw. The interview process for you will be good experience, and they’ll learn that they’re losing lots of good candidates with the stupid rule.

This is the advice of "Never say no, say yes with conditions."

Of course if the whole thing gives you a bad taste in your mouth and you basically never want to work for Amazon, I'm going to echo LadyCailin's advice. It does send a message, but it also allows you get in some more interviewing experience. Something that will hopefully make your next interview go even smoother.

Also, if you really want to send a message as well as get in some practice asking for absurd things ...

Say yes, but ask for the exception AND ask for indemnity from any legal action that Amazon (or anyone else) takes against you with respect to any software you develop on your own time AND ask that $50,000 be put in escrow that you're allowed to use in the event that Amazon gets cold feet in paying for your legal defense.

I can't really imagine that anyone would ever say yes to that, but it means that the next time you ask something that's a bit of a reach for an employer that you actually might want to work for, then you'll have had some experience asking for things that feel like a lot.

I'm not really that desperate for more interview experience. I'm already juggling interviews with 7 other companies right now, two of them already at the final stage and another one close, and I'm expecting to get 2-3 offers within a couple of weeks.

It's taken up most of my free time just keeping up with all of the assessments and interviews and correspondence as it is, I don't feel the need to spend another 2.5-10+ hours on Amazon (the assessment alone is 2.5 hours) just to give them a data point for why I withdrew that will likely be ignored anyway.