They are allowed to do that? It's your ebooks, not their ebooks.
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The only surprise here is that it took them this long to do it.
I've been downloading my books but most of them are DRM so I can't read them on anything BUT a Kindle. I've been thinking about getting another e-reader but I fear I'm trapped.
To all the people who are saying "I'll just pirate books," you are aware you can buy eBooks from places that aren't Amazon, right?
Have a look at https://bookshop.org/ebooks You can buy books/eBooks and support local bookstores that aren't Barnes & Nobles or Amazon.
I'd suggest you download/archive your Kindle books and then buy your eBooks from elsewhere. You can still load those onto your Kindle.
Saying "I'm going to pirate because one specific website is changing its policy soon," is pretty stupid.
EDIT: Turns out I was wrong about bookshop.org, you actually can't load their eBooks into a Kindle. You need their app since they have their own DRM. Looks like I got all worked up about something without looking it up first.
My favorite sites for actual ebooks are Humble Bundle and Fantastic. But these are predominantly tech books. No idea where I’d get good fiction in epub today.