This is the new section 3.3.1 of the iPhone Developer Program License Agreement, which was included in the beta 4.0 SDK released yesterday. Here's the policy before 4/8/10:
3.3.1 — Applications may only use Documented APIs in the manner prescribed by Apple and must not use or call any private APIs.
John Gruber was the first to blog about this change in policy. Basically, it means that Adobe's touted Flash-to-iPhone compiler is dead in the water, says Gruber. One can only imagine how Adobe feels after working hard to put this functionality into its CS5 suite, which is set to release on Monday (funny how Apple made this change just in time).
This change also affects other "meta-frameworks" like MonoTouch, which compiles C# to native iPhone code. Mono project leader Miguel de Icaza said this wasn't a problem though because MonoTouch can compile to C and XCode. It also seems that web app 'nativeizers' like Titanium and PhoneGap aren't effected by the change since they compile to Apple's WebKit implementation for the web.
There's plenty of reasons why Apple would do this. The Flash-to-iPhone apps certainly wouldn't have the full capabilities of a Flash app and it would be difficult to harness the iPhone OS as well as native apps do. Apple might come out and say that they don't want buggy, low quality apps in their App store made by cross-platform toolkits, but iPhone users already have to sift through a multitude of crummy apps to find the good ones anyway.
The real reason is probably that Apple doesn't want to cede control over development features to any other platform. Gruber explains this well:
"Consider a world where some other company’s cross-platform toolkit proved wildly popular. Then Apple releases major new features to iPhone OS, and that other company’s toolkit is slow to adopt them. At that point, it’s the other company that controls when third-party apps can make use of these features."
It's a business decision, plain and simple. Apple's philosophy dictates having complete control over the quality and paradigm of their platform along with the revenue streams coming from it. It's not a question of whether or not Flash is good technology - Flash doesn't run well on Mac OS X because Apple doesn't let it access APIs that would allow hardware acceleration. Apple doesn't want to allow third-party complexity into its simplified, monolithic platform.
The news is terrible for Flash Platform developers who already have the skills to make slick applications but can't put them on the most lucrative mobile platform. They can still build rich applications for the desktop and 19 of the top 20 mobile devices, but not the iPhone. This inability to cross-develop for mobile platforms may lead to a rise in applications written in web languages that run through the browser or natively. However, it's unlikely that web standards will move at the speed that Flash is going.
No one knows what Adobe's contingency plan is yet. They just released a statement saying, “We are aware of Apple’s new SDK language and are looking into it. We continue to develop our Packager for iPhone OS technology, which we plan to debut in Flash CS5.” It may be harder to block Flash apps than Apple thinks. iPhone apps compiled by Flash CS5 may not be distinguishable if certain translations make it look identical to app bundles produced by Xcode and the iPhone SDK, which means it would be difficult to enforce Apple's new policy. We'll have to wait and see what happens to those 100 AIR apps that Adobe says are already in the app store.