It appears that Walmart has apologized for the incident:
The Daily caller was contacted by Randy Hargrove, a spokesman for Wal-Mart, who said in an email, "Our local store made a mistake. The cake in the video should not have been made and we apologize."
Hargrove later explained to TheDC, "We made the decision to stop selling Confederate flag related items promoting the flag’s image. For that reason we did not make the cake. [Netzhammer] brought in the other image of ISIS and really, what happened, was our associate didn’t recognize what that image was and what it meant or it wouldn’t have been made."
Link:
http://dailycaller.com/2015/06/27/wal-mart-store-apologizes-for-baking-isis-battle-flag-cake-video/Even before I saw the apology and explanation though, I thought it was far more likely that whoever baked the ISIS cake didn't know the meaning behind the flag's design. Every American can recognize the Confederate Flag and I would think that most Americans are at least aware of its controversial nature (no doubt heightened due to recent events). ISIS on the other hand is still a fairly new phenomenon and one that has only seen mainstream coverage since last year. Had someone walked into the store and specifically asked them to bake an ISIS cake, their request would most likely have been rejected too.
Whether or not their decision to reject the Confederate Flag themed cake was a right one is a valid discussion but other than that, the comparison to ISIS doesn't really hold. Walmart wasn't standing up for ISIS or condoning any part of their ideology when it chose to bake that cake. It shows a bit of ignorance about what's happening in the world on the part of the baker but really, that's about it.