There are presently a number of GPS turn-by-turn applications on the App Store so it seems unlikely Apple would reject this app unless Google were to add some poison pill to force a rejection.
I disagree, Google would most likely offer this app for a very low price or free. Most of the current (decent) GPS turn-by-turn apps are very pricey up in the $70-90 range, of which apple takes a 30% cut. I find it unlikely Apple would want to cut off that income by introducing a Google Navigation app.
I'd guess Google wants to offer it for free. After all, it's going to be free on all Android 2.0 devices and (overall) they haven't shown much Android vs iPhone favoritism: except where Apple has not let them (e.g. Gmail, Google Calendar and Google Voice).
Overall, I think I'm beginning to understand Google's mobile application strategy better. They want their apps to win (or at least be popular enough to be a strong beachhead). Viewed from that perspective, Android is as much insurance (that they don't get cut off from an important application area by an OS/device vendor) as it is something they want to have adopted.
But they will probably also sell a lot more phones! A lot of people might buy android phones instead if they can get free navigation there, but apple insists on $99. (Of which they actually keep, what, $20-30$?)
AT&T is probably more of a roadblock here than Apple. I'd bet as a condition for allowing them on their network, they get a cut of the current navigation apps.
To Apple, I would think that equaling the playing field with this feature is much more valuable than their $30 for each TomTom app.
This just makes me think about all the wonderful iPhone applications that are being strangled in the cradle because their inventors don't have power and clout to pressure Apple the way Google does. I wonder if Apple realizes that Microsoft is to Mac as Google is to iPhone.
I'm thinking historically. Microsoft brought killer apps to the Mac (most notably Office) that helped them learn enough to eventually beat the Mac with an open(er) platform.
This time it is Google bringing (or trying to bring) killer apps to the iPhone (voice search, Maps/Navigation, Google Voice, etc.) with a long-run intention of (among other things) applying what they learn to their open(er) platform.
