Windows Phone 7 and Xbox ban GPL software
Every developer who wants to distribute through these channels has to agree to Microsoft's "Application Provider Agreement". (We have a copy of the terms as they exist today on our site, too, in case Microsoft changes theirs.) Section 1.l of these terms defines an "Excluded License," and that apparently includes any kind of copyleft license (although it explicitly calls out GPLv3 and its cousins):
"Excluded License" means any license requiring, as a condition of use, modification and/or distribution of the software subject to the license, that the software or other software combined and/or distributed with it be (i) disclosed or distributed in source code form; (ii) licensed for the purpose of making derivative works; or (iii) redistributable at no charge. Excluded Licenses include, but are not limited to the GPLv3 Licenses. For the purpose of this definition, "GPLv3 Licenses" means the GNU General Public License version 3, the GNU Affero General Public License version 3, the GNU Lesser General Public License version 3, and any equivalents to the foregoing.
Then section 5.e simply says that any app you submit must not contain any code under an "Excluded License:"
The Application must not include software, documentation, or other materials that, in whole or in part, are governed by or subject to an Excluded License, or that would otherwise cause the Application to be subject to the terms of an Excluded License.
Taken at face value, it's not surprising that Microsoft wants to avoid distributing any copylefted code. What is a little surprising is that they're so transparently revealing their motivations for having an "app store" in the first place: it's all about Microsoft's complete and total control over the platform, and everything that runs on it.
Historically, phones had limited hardware, and users understood that they could only accomplish so much. Today, many phones are powerful enough to qualify as general-purpose computers, and there's no meaningful difference between software you install on your computer and an "app" you install on your phone. Just like with your computer, you should be able to get free software from many different sources. But Microsoft wants to be the only source of software for Windows phones. They may claim it's for security, or for user convenience—but banning all copylefted software puts the lie to those claims.
Just like Apple, Microsoft's interests are opposed to phone buyers': they want to maintain control over a computer that you've already bought and paid for. Don't buy into it.