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Updated with comment from Google: A group of Android developers has splintered off and created its own community in the wake of last week’s dust-up between Google and Steve Kondik. The developer, who’s known as Cyanogen, drew the Internet giant’s attention by offering a free, after-market firmware product that bundled proprietary Google apps such as Gmail, Market, Talk and YouTube in a package dubbed CyanogenMod. Google filed a cease-and-desist order over the software last week, and Kondik responded in a blog post that the proprietary offerings will be dropped from CyanogenMod:

“These are not part of the open source project and are only part of “Google Experience” devices. They are Google’s intellectual property and I intend to respect that. I will no longer be distributing these applications as part of CyanogenMod. But it’s OK. None of the go-fast stuff that I do involves any of this stuff anyway. We need these applications though, because we all rely so heavily on their functionality. I’d love for Google to hand over the keys to the kingdom and let us all have it for free, but that’s not going to happen. And who can blame them?”

What the web is saying: Ars Technica: Google is certainly entitled to protect its legal rights and has done exactly that throughout the course of the Cyanogen controversy…Android had the opportunity to be the open answer to Apple’s walled garden, but instead it’s just a walled garden with a lower wall. ZDNet: In the end this was an open source dispute, handled by open source developers in an open source way. Let’s find a workaround. Let’s find a way to get along. There ain’t no one here but us chickens. Phandroid: The group says an alpha version of the software will be available from two weeks to two months from now, but I think that is an incredibly optimistic goal given the scope of the project. Especially since the whole plan may be based on a legal impossibility.

Kondik’s conciliatory post notwithstanding, Google’s legal maneuvering does seem to have taken the developer community by surprise. While licensing issues are commonplace when open source software is combined with proprietary offerings, platform vendors are often unwilling to risk upsetting developers by pursuing legal action. And the move seems to contradict Google’s public evangelizing of the importance of open source in mobile.

Google’s actions in relation to the open source community have given birth to the Open Android Alliance, which apparently does not claim Kondik as a member. Don’t confuse it with Google’s Open Handset Alliance, either. The newly formed group’s simple goal is stated on its home page:

“We aim to replace all closed source, proprietary applications in the base Android install with open source applications that can be freely distributed. We don’t have anything against the existing closed applications, however, we believe in open platforms and want all users to be able to modify their systems as they see fit.”

Conflicts with developers are nothing new in mobile, of course. Apple has drawn considerable flack for its seemingly arbitrary approval policies for App Store offerings, and Google was criticized for what some viewed as a closed development process before its commercial debut. But this could be a crucial moment for Android, which is still in its early days. Open source developers will look to create alternatives to Google’s proprietary offerings, competing with the very company that provides the platform. And discouraged mobile developers have a host of attractive platforms to build to, including the iPhone, Palm’s webOS and RIM’s BlackBerry.

The “de-Googlification of Android” isn’t unexpected, Alexander Muse of the Dallas-based publisher Big In Japan, which makes the popular ShopSavvy Android app, said via e-mail. And it isn’t necessarily a bad thing:

“I suspect that Google will attempt to protect its (unregistered) trademark ‘Android’ and seek to prevent them from using the Android name in their project. We don’t have time to mess around with turf wars like this…. If they drop the ball I see LOTS of need for efforts like this. At the end of the day this is a good thing for the hacker community (i.e. techie types) and for Google. This doesn’t stop Google and their strategy – it actually helps it.”

Google’s desire to keep a tight hold on its proprietary apps, especially given the enormous potential mobile holds for such offerings, in understandable. And I think Muse could be right that it could benefit Google in the long run. But this tempest in a teapot is expanding by the day, and a misstep by Google could do massive damage to its developer relationships. Update: A Google spokesperson sent us the following statement:

The power of open source is that the community can shape it as they see fit. One thing we know for certain — innovation doesn’t come from a single source. Google supports and encourages developers to make Android better.