A lot of people have been talking about Twitter's recent stance on third-party apps. I think Mike Loukides of O'Reilly really hits the nail on the head:

...you can't tell people where (or how) to innovate, and where not to. Innovation just doesn't work that way. The best way to prevent "think big" innovation from happening is to cut off the small ideas.

Even John Gruber, unabashed Apple fanboy, agrees:

It’s not that I think Twitter is wrong in any moral sense to do whatever they want with their own API — it’s that I think they’d be foolish to do anything that dampens the diverse ecosystem of client software that has evolved around Twitter. They’re acting against their own self-interest, but apparently don’t realize it.

Whether it's "moral" or not is open to debate. There does, however, seem to be general consensus that the changes in Twitter's policies are bad for developers, bad for users and in the long term bad for Twitter.

The general form of the argument, which I wholeheartedly agree with, goes like this:

1. Artificially restricting developers hurts innovation. (See Loukides's quote, above.)
2. Hurting innovation hurts users.
3. Hurting users hurts the platform creator.

These can be long term things, which makes them hard to measure. You can't just change your policy and see the effects overnight. For example, it might have taken years before a particular sort of ground-breaking third-party product would appear on a restriction-free platform, so in the short term having restrictions that forbid its existence might not appear to have significant detrimental effects. Likewise, most users won't miss the utility of a product they don't know exists, or even can exist. It generally takes a competing, less restricted, platform to come along before people really start to realize what they're missing. This is further slowed down by network effects.

What's interesting is that this exact same chain of reasoning also applies to Apple and their App Store policies. Just as Twitter API clients should not "compete" with the official Twitter clients, apps for iOS are not allowed to compete with Apple products (or even other established iOS apps, to a degree). The iOS policies are actually far more restrictive on innovation than Twitter's policies, as the iOS policies largely forbid using Apple's APIs in any way that Steve Jobs didn't already imagine. "Think Different", indeed. (As an aside, I think Gruber is at least partially aware of the similarity, or he wouldn't have so carefully prefaced his statement with "It’s not that I think Twitter is wrong in any moral sense".)

The parallels run even deeper. Even people who have come out in Twitter's defense on this issue often point out that Twitter's platform was in many ways built by the Twitter community (hash-tags and at-replies were being used by users before Twitter even had special support for them) and the large variety of Twitter clients also contributed to Twitter's success. For Twitter to suddenly institute draconian policies seems like a betrayal to some.

If Twitter betrayed their users by being open at first and then closing up once they achieved popularity then Apple is just as guilty. Apple's trick was to stretch things out over a much longer time frame. Historically, Apple hardware was touted as being quite open. The Apple IIe was easily hackable both in a software and hardware sense. Apple's products weren't marketed as the "computer for the rest of us" just because they were easier or prettier than the competition, but also because they purportedly made it easier to create all sorts of things, including visual art, music and even computer programs. (I say "purportedly" because the Amiga and Atari ST were arguably just as good if not better when it came to certain sorts of creative work.) Remember Hypercard? A third-party equivalent to HyperCard wouldn't even be allowed given the current iOS App Store policies.

One last thing to note is Twitter's stated reason for the policy change:

If there are too many ways to use Twitter that are inconsistent with one another, we risk diffusing the user experience.

Hmmm, sounds like they're worried about "fragmentation".