Sounds like Amazon just doesn't want to stir the pot. I'm sure they already have enough interaction with federal and local governments regarding their anti-competitive practices (using their position in the industry to force publishers and developers to charge a specific price), sales taxes, etc... They'll probably just wait for Apple, Microsoft, and Google to battle it out, and in the mean time, remove any features that would make them any more of a target.
That said, when this whole Apple/FBI debacle started, it made me realize I never bothered to encrypt my phone. How many people know how to encrypt their phones and actually do so? Maybe Amazon is removing a feature none of their customers ever used (what would you even encrypt on a Fire TV?). No one ever accused Amazon of respecting consumer choice.