Yes, they can. And they have in the past. A few years ago, they "discovered" that they did not have the right to sell the book 1984. Instead of sending out an email to customers who had purchased it, they simply went in and deleted the file from the customers' Kindles. It took at least a few days before they did any kind of press release or let people know what happened, and then it was only after customers complained publically. They offered a credit of whatever amount the customers had paid. That was it.
And ironic, considering what title it was.
That's why at least once a week, I back up any ebooks I've purchased. Since we're not actually buying anything, we are just getting a temporary license that can be revoked at any time. Which only feeds into the "ebooks are too expensive" school of thought.