Google does not like independent developers entering their territory. Infinite SMS a 99 cent iPhone app (developerd by Innerfence) used the Google free text messaging in Gmail Labs so that iPhone owners could send free SMS.
The app was hit because text messages for 140 characters are too expensive. It reached the number eight spot in Apple's list of bestselling paid iPhone apps.
Google cut off access to the SMS with this explanation:
"Infinite SMS is a third party app that has been using Google
technology to provide free SMS for users, while we were paying for the
cost of the text messages. While Google is supportive of third party
apps, we've decided we can't support this particular usage of our
system at this time. SMS chat is still just an experiment in the early
testing stages in Gmail Labs. We're blocking all external XMPP clients
from sending SMS; we're not singling out Innerfence."
The Innerfence blog tells their side of the story:
"We acted in good faith, accessing a
feature publicly
announced by Google
over open
protocols they made available. Other non-Google apps have been
able to access the SMS feature since its launch. To us, this was no
different from accessing Gmail's near limitless storage over the open
IMAP protocol. We never could have guessed that the two of us would
write an app too big for Google."
The
cost of the text messages is not like email, carriers put surcharges on
the text for access. In the Gmail SMS client surely, you are viewing
ads while the SMS is free. The Infinite SMS app most likely cut in to
ad profits which would pay for the carrier fees.