Google Bans Tethering Apps in the Android Market: Deja Vu

Phone carriers do not like tethering, that is very clear. Many smartphones have integrated 3G and carriers rely on the charges for that bandwidth to keep them profitable. Tethering, the ability to use the phone as a modem for laptops, has long been shunned or outright banned by carriers that do not want to see that ability cut into the bottom line. Many U.S. carriers charge an extra monthly fee for the privilege of tethering the laptop to the 3G phone, while some forbid it outright. Google has reportedly notified a developer that their tethering app is a violation of the TOS of the Android Market and it has been banned. It’s deja vu all over again as this is what we’ve seen from the Apple App Store from day one.

Tethering apps are the bane of the carriers and they are becoming the bane of the app stores, too. This masks a much bigger problem for consumers that is only going to get worse as these on-device stores become the norm. App stores in essence become a funnel for the development of phone apps as they become a de facto primary source for programs. The drive to open app stores by every major platform makes this clear, the players understand that the casual user will buy apps through the store on the device, even if other sources exist for programs. This will become glaringly apparent when Microsoft gets its Windows Mobile Marketplace going later this year.

Microsoft recently touted that there are 25,000 apps for the Windows Mobile platform, thus making them a major player in the phone market. This is certainly true but once the Marketplace opens I suspect we’ll see that number dry up significantly. Microsoft will be “approving” apps for inclusion in the Marketplace just as Apple and Google are now doing and this will result in a lot of situations like this with the tethering apps. Developers are going to make active business decisions that they can no longer sell their apps outside the Marketplace as the risk of low sales numbers will be very real. Casual users will buy apps on the phone, not go searching the Internet for other options.

This will inhibit development more than anything else has done to date. Any app that the developer feels may fall under the “Big Boys” radar for exclusion from the app store will be dropped rather than risk losing the effort of development. This is not going to get better going forward; it will really become a barrier when more major app stores hit the devices.