The three-year-old startup was acquired by Google last September, and had promised to remain open into spring 2016 as the staff transitioned over to Google. Alas, that did not happen; instead Oyster started closing accounts in late December. Judging by the tweets I found, Oyster closed accounts as each account came up for renewal, and then followed that with a formal shut down of the service on Friday.
In keeping with Google's usual reticence, Oyster has said little since the acquisition last year (in fact, the changelog for the last update includes little more than a broken link to an FAQ). “As we continue on, we couldn’t be more excited about the future of ebooks and mobile reading. We believe more than ever that the phone will be the primary reading device globally over the next decade—enabling access to knowledge and stories for billions of people worldwide,” the Oyster team said last fall.
The terms of the deal have not been disclosed, but it was widely assumed that Oyster sold out and shut down because its service was not viable.
Between Scribd, Oyster, and Kindle Unlimited, Oyster was the smallest of the mainstream subscription ebook services. Its service never expanded beyond the US, and given the financial problems that Scribd had last year it was reasonable to conclude that Oyster's financial state made the sale more attractive than continued operation.
We did know that some members of the Oyster staff were going to work for Google on Google Play Books, but a check of LinkedIn showed that many Oyster staffers are still listing their old Oyster job, and not the new position at Google.
So clearly the company is still in the process of being dissolved, or at the very least this story is not over with just yet.