This just in -- General Motors has told customers that in the future they must only buy gasoline from Exxon stations. GM will get a share of Exxon's revenues as part of the deal.

The car and truck giant has fitted sensors in its new vehicles to make sure customers don't cheat.

Where it finds "unapproved" gasoline, GM is invalidating the vehicle's warranty and sending out agents to cripple the cars' engines, rendering them useless. The agents also let themselves into GM vehicles to remove unapproved accessories. "We are protecting the integrity of the user experience," said a spokesman. "Customers are only allowed to have a radar detector, or a new seat cover, when we say so."

Pure fiction? Obviously.

GM would never behave in such a totalitarian or bone-headed way. There would be an outcry if it did. But the scenario above isn't far-fetched. Just ask anyone who bought an iPhone.

This is exactly what Apple ( AAPL) has just done. In case you missed it, the company used its latest software upgrade to cripple every iPhone that had been opened up to unapproved networks, and stripped out "unauthorized" third-party applications.

Apple's message to its customers: You will use the network we tell you to use. You will use the applications we tell you to use.

Memo to Apple: You guys are kidding, right?

Twenty-three years ago, in 1984, Apple ran a famous commercial portraying itself as a rebel taking on the "Big Brother" of IBM ( IBM). Today, Apple has become Big Brother.

So the big news this week is that genuine rebels are fighting back: Owners of crippled iPhones have just filed a class action suit against the company.

In the free republic of the Internet, hackers are already reported to be launching software fixes that undo the damage of the company's software upgrade.

Meanwhile, Apple may face a legal challenge if it tries to launch the iPhone in France. Under a 1998 French law, you're not allowed to keep a mobile phone locked to a single network. Vive la France!

Here, the law does nothing.

Apple declined to comment.

But it has already offered a variety of lame public relations explanations for its behavior. It says it has crippled hacked phones to protect a long exclusivity deal with AT&T ( T).

Response: No one made you sign such a deal.

And Jobs says "unauthorized" third-party applications could threaten the "integrity" of the operating system and the "security" of the network.

Response: Just how dumb do you think we are?

Millions of people already use smartphones like the Palm ( PALM) Treo, Motorola ( MOT) Q, Research In Motion ( RIMM ) BlackBerry or Nokia ( NOK) e61. They are all loaded with third-party apps and new ones are being written every day.

The world hasn't ended. Funny, that.

For that matter, I have a variety of third-party applications loaded on my Apple Mac at home. It seems to work fine too. Hey, Steve -- do you want to sneak into my den to wipe my hard drive?

If the iPhone sucked, none of this would matter. But it doesn't. It has so many great aspects to it. The hardware and the interface are terrific. And the Mac OS should be head-and-shoulders above anything else in the industry.

You look at the iPhone and wonder what on earth the honchos at Palm, Hewlett-Packard ( HPQ) and Nokia were doing all these years.

But without choice and freedom, all this is worthless.

I won't consider buying a handheld that won't let me load the programs I want to load. I have no idea what games Steve Jobs wants to play on his handheld, and he has no idea what games I want. That's why we have choice. Instead, the man is behaving like an old-fashioned Soviet commissar.

Nor will I buy a locked phone so that I have to spend 45 cents a minute in "roaming" charges to make a phone call when I am in Europe.

Consumers want choice. They want freedom.

The crazy thing is that this strategy is doomed to failure anyway -- and it's going to be terrible for business.

A decade ago, it was all the third-party applications that sold me -- and millions like me -- on my first Palm Pilot. At the time another company, Psion, made a better personal digital assistant. The hardware and operating system were excellent.

The problem? Psion refused to allow third-party software. You could only use theirs. Seen any Psion PDAs around lately? You won't. The company's PDA business collapsed in ignominy.

And Steve Jobs is now pursuing... Psions' strategy.

The latest news this week shows how doomed this is. Every time he tries to handcuff his customers, someone on the Internet will show them how to pick the lock.

All he is going to get, ultimately, is frustration and a truckload of bad PR.

Meanwhile rival handheld makers are going to respond to the iPhone by drastically rethinking and improving their own product lines.

And theirs will be unlocked and open to third-party software.

Apple is doing itself no favors at all.
In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.

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