No, it’s because the CardDAV standard was not created with encryption in mind. It’s also why calendar and mail are not encrypted in iCloud.
We don’t trust proprietary stuff because we’ve been burned by it, if there’s an open standard, even a worse one: use it.
If it’s really that bad, we need to improve the standard.
You connect from any compatible client; and the effort that has gone in to the Mail client for iOS means it’s a decent enough mail client for non-iCloud mail accounts too.
Apples closed ecosystem is mostly its developer tooling and iMessage.