Google have apparently pulled all tethering software from the Android Market, claiming that the apps violate their distribution agreements with carriers. According to one of the developers behind WiFi Tether for Root Users, since tethering contravenes T-Mobile's terms of service Google have removed access to all such software through the Android Market thanks to a clause in the Developer Distribution Agreement.
"Google enters into distribution agreements with device manufacturers and Authorized Carriers to place the Market software client application for the Market on Devices. These distribution agreements may require the involuntary removal of Products in violation of the Device manufacturer’s or Authorized Carrier’s terms of service." Google Developer Distribution Agreement
That agreement basically says that Google will enforce the carrier's ToS on all apps coded for the platform, whether they are used by customers of that carrier or by those who bought their Android phones unlocked and may have separately arranged tethering agreements in place. It also raises questions about future carriers signing up to Android - such as when Vodafone release the HTC Magic in Europe - and the impact their ToS may have on software.
Google's app sweep seems to have been an unnecessarily thorough one, too, removing apps which arguably have functionality not in contravention with carrier's ToS. One banned app allowed the Android phone to act as a bridge between a WiFi router (sharing a broadband connection, not T-Mobile's data network) and a Bluetooth device lacking its own WiFi.
[via Android Community]