We’ve asked Amazon if it can comment on the decision.
AFTVnews speculated that it may have to do with the unconventional connection. Amazon switched to a WiFi Direct connection for the second-generation controller in order to reduce lag (all-important for game sessions), but it was both unconventional and complex. Your Fire TV would show up as a WiFi hotspot, for example, even though it was just waiting for a Game Controller. This may be an attempt to simply things and steer users toward Bluetooth controllers (which still work), or a recognition that the Fire TV isn’t the gaming machine Amazon hoped it would be.