The hosting provider is free to decide who they want to host and who they don't want to host. If they're fine with being known for knowingly hosting the scum of the earth, more power to them; but they are also absolutely allowed to nope out of that.
How about suing people who post illegal stuff and leaving the matter to the courts? Having to pay tens or hundreds of thousands of dollars in fines will deter unlawful people more than having to change hosting provider every few years
Genuinely curious what your take is. I think the topic of the bakery owners is so widely known because of this. As the other reply said, and your discussion has continued: I believe that it ultimately comes down to what has "arbitrarily" been decided as a protected group. ("Arbitrarily" in quotes because it is ultimately the American political system in this case, and that's not really arbitrary.)