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The format control isn't really to keep other books off the kindle... it's to keep you in the kindle ecosystem. Thanks to Amazon implementing its own format, with its own DRM, you can't move your library away from Amazon. Making it more likely you'll stick with them. (Yes, I know there are ways to "rescue" your library from Amazon. But the general public will never bother with them.)
So yeah, you can read your books in the kindle app on any tablet or phone... but you're still in kindle space. Making it likely that the next book you get will be a kindle edition. Which makes it that much harder to move away from kindle...
I prefer Kobo's way of doing things. Sure, I use kepubs when I buy from kobo. But I can download the ADE (or, sometimes, non-DRM) epub version and use a Sony if I want. Or some other reader entirely. Without jumping through technically illegal hoops.
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