Or something...
If you need me to break it down even further - removing the ability to produce and understand media, be it just even a specific format from any entity ("stakeholder") other than Amazon, from my point of view is unacceptable from the cultural (as it impacts society) perspective - and it is an outright atrocity to already see this format pushed out as the new default via auto delivery - as part of a process that cant be changed. (If Amazon had at least put in an opt out - I could now campaign for people to use it..)
Just look at what it has created already - we are living in a world were authors and publishers put their books on Amazon - then wait for their algorithm to "fly over" and create a version of it thats considered by certain interests to be "more premium", and is positioned to be accepted by the user as such. (Downconverting your images as it sees fit, reinterpreting the structural layout you have given it - but, why all the fuzz about that - you can still "guess" how it will look like in the end...)
H,E,double hockeysticks - consider for a moment, what the response would have been if Amazon announced this to be their eBook perspective from the outset.
Consider the perspective that soon "selling eBooks" will mean to distribute blobs of data, not even one of us should be able to understand - structurally, function wise, conceptually. Because they all have to be created by Amazon themselves (to be fit for auto delivery).
And there is also a strong connect toward the notion of "oh, Calibre is so cumbersome - and it only supports the old formats, .. - so why not give up managing our books locally - why not just use Amazons cloud".
The statement from darryl implicitly suggests alterior motives in as much that I would favor a competitors solution. This is not the case. (I agree, words are cheap, but for what its worth - I at least have said it..) I see this as a structural issue - because if the Amazon model becomes viable (and since it already is in place..), competitors might take it up as well. I literally have to do it the hard way and try to create a sensibility within the more technically inclined userbase where all of this matters.
I cant just tell you to go out and buy *insert different product*.
Also - there is the argument, that while - yes, this is bad, its not time to take action now - because Amazon still feeds us with this breadcrumb solution of "why not log into your Amazon account on a PC, use an browser and a USB cable - and voila - you still get a format you are allowed to understand". The point here is, that this is not what the majority of customers will buy. Conceptually - I bet that the same 95% that never change a facebook default, soon never will hold an eBook in their hand that the public still understands structurally. Oh - they still will be able to look at it, probably even sell it used one day - but the point being, that this is Amazons infrastructure. Their market subsegment. Their economy. Their product.
And this is not what books are. Fundamentally not.
If you dont want to take action now - maybe not "fine", but "ok". But we have to develop the notion of what is going on right now - while you might choose to do nothing about it. We are talking about the beginnings of a future, where culture really just becomes content first. (Think Spotify without the ability to buy CDs, mp3s, aac files - or anything else that we understand as a format.)
Just a new DRM layer would have been fine with me (This is about as far as I will go making concessions.) - .kfx is something entirely different. Its a beast. (There, rhetorics at work again..

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Now - back to reading your responses, so far I have only skimmed through them and already got animated enough to write this response..
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edit: Amazon might be as good or bad as any other company (not taking into account their market share, their leading role within this industry, or anything resembling an informed stance on this issue), but they have simply crossed a line. And they have done it in other segments of their "content distribution" ambitions as well.
Do you still have the image in mind where Apple dictated the rules of the new digital economy to music lables - and in the end they got burned and never would have done the deal again? Well I envision the same outcome with Amazons market defining ambitions in the sectors they entered - but on part of society as a whole. Because no one, no one - can argue towards this, this being the sensible solution.
I was upon the first to call publishing houses crazy for chaining themselves to Adobe (DRM wise), especially outside the US - partly because in the tech community "trusting in Adobe" has become somewhat of a running gag on its own..

But from now on (from this point forward) half of society (consumers, publishers, authors) will trust in Amazon to be the "guardian, sole proprietor and distributor" of books (at least the "premium" flavor of books in the Kindle ecosystem)?
I'm not talking about a customers informed buying decision - but transitioning costs. What it takes to leave this ecosystem - some day in the future. Heck I have maybe a hundred books in my possession (maybe more), where neither the publishing house nor the distributor even exist today. Thats "nimble" for you - as a concept. These books can still be read, exchanged, sold. But from now on - for most Kindle customers it is Amazon all the way - right? And Kindles will last forever..
And also there is a difference between choosing your "store of choice" and what we call a "lock in". Well - the lock in all of a sudden isn't just behavioral anymore. For the suggested 95% it has become practical. (edit: Or at least so unlikely that...) I am sure the product blogs will catch up with this development any minute and start informing their userbase... *sarcasm*