This really has nothing to do with HDMI. It has more to do with how Dolby makes money. They pay film and TV studios to mix in ATMOS which can only be decoded us

This really has nothing to do with HDMI. It has more to do with how Dolby makes money. They pay film and TV studios to mix in ATMOS which can only be decoded using Dolby's licensed chip technologies (it's not implemented in software, usually) which they sell to OEMs. HDMI is just a transport layer, it's not the only one for ATMOS just what is most commonly found in consumer devices. That said, phono audio connections are objectively terrible and their only redeeming quality is simplicity. I'll take HDMI ARC over it every day, because I don't want multiple control points for my audio signal. There's also a new standard for immersive audio bitstreams that will hopefully result in software decoders but I doubt we'll see that in consumer gear anytime soon.