In an interview with USA Today on 7/29, Bezos gave this reply when asked why Amazon didn't support ePub:
Quote:
Q: Why doesn't Amazon support the popular "e-pub" standard used by your competitors and many libraries?
A: We are innovating so rapidly that having our own standard allows us to incorporate new things at a very rapid rate. For example: Whispersync (which uses wireless connections to sync your place in a book across devices) and changing font sizes.
Other standards over time may incorporate some of these things. But we're moving very quickly to improve the state of the art. It's very helpful not to have to wait for some third-party standard to catch up.
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It sounds somewhat arrogant, but if Amazon has their own proprietary format, they can do more with it, rather than a format "designed by committee". You can probably add to the list: annotations, bookmarks, changing font styles, etc.
Amazon's competitors
have to support ePub, because they are looking for any advantage they can to beat the #1 selling e-book reader. This may change for Amazon in the future, but for now they're Goliath and they can do what they want. Kind of like Apple.