With little clarity on what constitutes "duplicate functionality", Apple rejected the iPhone podcast client Podcaster on the grounds that "since Podcaster assists in the distribution of podcasts, it duplicates the functionality of the Podcast section of iTunes".
No one should expect Apple to include competitive applications in it's walled garden. That would be the equivalent to Salesforce.com putting other CRM apps on the AppExchange. It's bad business for them. And it's just not realistic.
Nonetheless, this calls into question just how you can have a "platform" when the platfrom vendor arbitrarily decides to eliminate competition. The company shouldn't encourage developers to embrace the iPhone as a way to make money without clear ground rules on how to interact with the company.
As developer Fraser Speirs writes:
Let's be clear: forbidding "duplication of functionality" is forbidding competition. The point of competition is to do the same thing, but better. Worse, Apple hasn't even said which functionality is off-limits. I'm not arguing about what's legally or morally right in some abstract sense. I'm talking about common sense -- talented developers are looking at what is going on with the App Store and choosing not to write iPhone apps, out of the fear that their efforts will be for naught. If good developers are afraid to write software for your platform, it is a problem.
I've banged this drum before in relation to Facebook, another walled-garden that encouraged development then immediately replicated the functions of the ecosystem and took the monetization opportunities into their own hands. Investors who put dollars into companies whose products only run on Facebook headed for the hills months ago. Sadly, the iPhone may be the next bubble unless Apple provides some clarity.
When a platform is not open you are at the mercy of the vendor who may/may not be interested in making your life easier or making you money. While it's hard to say that Apple has been purposely disingenuous , it's clear that the company hasn't accurately represented the rules for exclusion.
Nothing kills 3rd-party developer motivation faster than unclear rules of engagement.