Earlier this week following the announcement of the iPhone 4, Apple revised the terms of service (TOS) for advertising within applications due to the impending release of its iAd mobile ad service. Apple's new TOS only allows ad networks whose sole business is delivering mobile ads to collect data from those ads, effectively cutting out larger competitors like Google's AdMob. Today, AdMob's founder Omar Hamoui responded to Apple's revisions, which he believes will stifle innovation in the space.

"This change threatens to decrease - or even eliminate - revenue that helps to support tens of thousands of developers. The terms hurt both large and small developers by severely limiting their choice of how best to make money," Hamoui said. "And because advertising funds a huge number of free and low cost apps, these terms are bad for consumers as well."

According to Apple, only "independent" ad providers will be allowed to gather data. This excludes ad networks affiliated with "a developer or distributor of mobile devices," like Google's AdMob, or with "development environments other than Apple," like Adobe, which recently teamed with Greystripe to bring Flash ads to the iPhone.

Hamoui says Apple's "artificial barriers to competition" will not only hurt developers and users, but will slow mobile ad innovation. It is true that competition has spurred innovation and produced better results for consumers in the past, and that certainly would lead one to conclude that Apple's moves are in direct contrast to that belief.

However, it seems Apple is taking an AppStore approach to iAd - making it a closed system with no competitors on the company's devices. Just as it restricts what apps can and cannot be in the AppStore, Apple wants to limit which ad networks can and cannot serve ads on their phone. While the AppStore restrictions are partially meant to provide stable apps in line with Apple's positive user experience desires, the iAd restrictions seem more focused on driving away competition than producing better Ads for users.