“They weren’t all bad, you know. One of them even tried to help us. He was called September. What happened to him was, well, unexpected.” -Walter (419)
I think, because they failed to hide the Universe from him when he chose not to erase Peter, the Observers (or Oppressors) eventually decided to punish his disloyalty and love for our Fringe Team by abducting him as a child (in the future) and dropping him in a hole (literally and figuratively) in the past (ie the Inner Child episode) - hoping that by eliminating him (via the CIA) and his eventual ‘mistake’ (if dropping by Walternate’s lab was really even a mistake) this whole timeline (+/- random branches) will never again exist. Except of course, as punishments go, that also totally failed - because Olivia cared, and Walter danced, and Peter shared his toys.