Does anyone knows who is paying for the free (normally paid) Android programs on the Amazon store
No one pays or gets paid.

According to the original version of Amazon's developer agreement (see section 2(a)) a developer received at least 20% of the price the developer set for the app, regardless of the price Amazon actually sold it for.  But they changed the agreement, adding the sentence "No Royalty is payable for Apps with a List Price of $0.00."