The clause basically informs iPhone and iPad developers that they cannot use a code creator such as Adobe Creative Suite 5. Which at the very time that Adobe were working on shipping Flash CS5 for which would work on iPhones allowing them at last to play back flash.
This appears to have finally driven Adobe away from Apple as Mike Chambers stated on his blog on 20th April
'Personally, I am going to shift all of my mobile focus from iPhone to Android based devices (I am particularly interested in the Android based tablets coming out this year) and not focus on the iPhone stuff as much anymore. This includes both Flash based, and Objective-C based iPhone development.'
'We are at the beginning of a significant change in the industry, and I believe that ultimately open platforms will win out over the type of closed, locked down platform that Apple is trying to create. I am excited about Flash Player 10.1 and Adobe AIR 2.0 and all of the opportunities that they will make available to Flash developers across multiple platforms (desktop, Android, Palm, Windows Phone 7, RIM, etc…).'
Why oh why do Apple continue with their attitude of wanting to control the world and everything that runs on their devices.... Apples are the best in the world how much better could they be with some OpenSourcing???
Read Mike's blog and the BBC technology report