http://online.wsj.com/media/swf/VideoMicroPlayer.swf

According to the WSJ, Apple’s about face on 3rd party app development may have been due to pressure from the FCC:

The concession comes after the Federal Trade Commission launched an inquiry around June to determine whether Apple had violated antitrust laws with the earlier policy. It isn’t clear if Apple’s move Thursday was in response to the FTC’s investigation, but it will likely be carefully scrutinized by the regulatory agency, said people familiar with the situation.

They also speculate that other platforms may have been a factor:

Some analysts said the changes show how threatened Apple is by the increasing momentum of Google’s Android Market. App development for Android could heat up with the introduction in coming months of several Android tablet computers that will rival the iPad.

“They’re trying to make sure they stay the most interesting and most important development platform,” said Jeffrey Hammond, an analyst with technology firm Forrester Research.

… Hammond said some developers also are starting to develop apps for the Android Market first, so they can start making money immediately while they wait for the App Store version of the app to go through Apple’s approval process.

“Customers are saying, ‘You know what, I don’t have to do the iPhone. I have a lot of other viable choices,’” said Dave Wolf, vice president of strategy at Cynergy Systems Inc., a Washington, D.C., software design firm that builds software using Flash and other programming languages. “I think Apple saw that writing on the wall.”

Also, Facebook developer/squeaky wheel Joe Hewitt chimed in:

Joe Hewitt, a Facebook Inc. software engineer, caused a stir last November when he announced he would stop developing for the iPhone because of Apple’s review process. He said in an email that Apple’s policy change is “a wonderful improvement” that shows Apple has improved the tone of its relationship with app developers. Mr. Hewitt, who developed Facebook’s iPhone app, said he was working on other projects but would probably develop for Apple’s App Store again “when I do have time someday.”

This clearly wasn’t Apple’s plan when Steve Jobs penned his Thoughts on Flash.  Something changed significantly.

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