You want them to reveal Milo's private DMs with other people? I think they absolutely shouldn't: Milo still has a right to privacy. I get that it makes things inconvenient for us onlookers because we can't independently verify these things to determine if Twitter is overreaching, but the alternative is exposing private information about Milo to the world. If Milo were to say "go ahead and release everything you have on me, I've got nothing to hide" that would be different.
Easy: they don't benefit at all from it. I'm not a lawyer, but I can easily see how it's not a good idea to talk bad about someone who used your platform.
There's nothing to gain, and a lot to lose by doing so. It's kinda lose-lose for Twitter, but few people seriously care about Milo getting banned.
I'm not really debating you since there isn't much to debate. I'm just curious why you care so much about what a private company allows on their platform.
Second, his account was suspended many times. Repeatedly. Eventually they banned him.