It’s round two in the Google versus Kongregate mobile arcade match — and hopefully there will be less drama this time around.

Flash game portal Kongregate has released a new version of its mobile arcade application on the Android Marketplace after its first application was abruptly pulled, in a move more characteristic of Apple, for violating the terms of service.

The latest version of the application explicitly uses the web browser to run each game — the application basically launches an instance of the webkit browser and shows an address and progress bar. The games that are downloaded are only stored in the cache of the web browser instead of on the phone. So the game is technically not downloaded directly to the phone — a sore point that caused Google to pull the application from the marketplace.

The initial version of Kongregate downloaded the flash games onto the phone’s cache and it wasn’t immediately apparent that the game was played in a web browser (although that’s how the application actually worked.) That prompted Google to abruptly pull the application from the Android Marketplace for violating its terms of service — specifically the non-compete clause. Google gave Kongregate a good bit of feedback about why the application was pulled, but communication dropped off after the search giant made it clear it wasn’t willing to budge and re-instate the application.

While the Android Marketplace has traditionally been a more open development launchpad for app makers, Google’s slap at Kongregate seems characteristic of Apple’s more closed operating environment. Google wasn’t in contact with Kongregate for nearly a full day after the site first tried to appeal the app’s removal and wouldn’t give specific reasons why the application violated the terms of service, despite the highly technical nature of the infraction, said Kongregate CEO Jim Greer.

“We told them that (the games ran in a browser), and they circled back up internally and said that despite the fact it was in a browser they felt it was still over the line,” he said. “It’s their terms of service, so there wasn’t much point in continuing to argue with that.”

Sounds awfully similar to a line we’ve heard on another app store, doesn’t it?

Google basically said the application behaved like an app store within the app store by downloading games onto the phone’s cache, which would potentially pull revenue away from Google’s Marketplace. Kongregate would be allowed to sell each game individually as an app; it just couldn’t serve as a place to download them. The original Kongregate application that downloaded games to the phone’s cache is still available on Kongregate’s website, but the site might pull it down if that’s what it takes to keep an application on the Android Marketplace, Greer said.

The initial Kongregate application had around 30,000 downloads and had a 4.61 out of 5 rating on the Android Marketplace before Google pulled it. Since then, Kongregate has redesigned the app to Google’s liking. After around five days of programming the team was able to turn it around and launch the new one, which is currently live on the Android Marketplace.

VentureBeat has contacted Google for more details about the launch and the fate of Kongregate’s latest version. Stay tuned for updates.