iLounge spoke to sources familiar with the upcoming iPhone/iPod Touch software development kit, who explained that not only would Apple be distributing all third-party applications through iTunes (bad enough) they'll also be approving which applications are allowed to be sold (way worse).
Apple as application picker. The most controversial aspect of Apple’s SDK plan is its intention to formally approve or deny all SDK-based software releases for its devices. Our sources confirm that Apple will act as a gatekeeper for applications, deciding which are and are not worthy of release, and publishing only approved applications to the iTunes Store; a process that will less resemble the iTunes Store’s massive directory of podcasts than its sale of a limited variety of iPod Games. While one source saw this as a positive for major developers, suggesting that Apple will be choked by application submissions and forced to give priority to releases from larger companies, another source disagreed, stating that Apple’s current approval processes for third-party products have resulted in lengthy, needless delays. It is unclear whether Apple will need to approve subsequent bug fixes and feature additions to accepted applications, another issue that could clog the approval system and postpone important improvements.I really love my iPhone, but come on. I really hope there is an accepted way for third-party apps to be added to the iPhone without going through iTunes. Some of the apps I want will certainly not be approved by Apple for sale on iTunes (such as remote audio streaming). iPhone/iPod SDK: Apple to approve, distribute apps, limit add-ons [iLounge]