This was the case long before Apple, and started at the carrier telco's. Apple was the one who wrestled the control of the app store from the telco's, who were even worse!
Myself and a buddy built cool fun a bartender app (recipes for alcohol drinks) for the Danger Hiptop. It was rejected by the telco (t-mobile) because they were afraid of lawsuits due to the 21+ nature of the app. We never really got a formal rejection notice, they just stopped responding to us. It was also one of those things where you had to build the app first, submit it (to Danger, who then presented it to the telco), take the risk on everything yourself, and then get silently rejected. What a mess.