He's probably thinking that despite the few dollars he might lose in the short term, the business-using world doesn't want that garbage on a business phone. And business is where Apple where they would love for the iPhone and iPad to really take off.
Not to mention, as MacBozo stated, the threat of lawsuits is always present.
And quite frankly most of those apps were made by only two or three developers and were (from what I hear) cappily-made apps.
That being said, anyone wanting porn on their iPhone can simply use Safari - and get much better stuff
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