It’s not a story about banning, it’s about not giving it a platform. Surely you don’t think there’s a constitutional right for every book proposal to be published by a major publishing house?
My guess: Simon & Schuster dropped Milo after they realized it would not be profitable to publish his book. They don’t care one way or the other about ideology.
Please read the actual 1st amendment. It refers specifically to acts of Congress, not decisions of free-market enterprise.