I find that very concerning. How can they expect everyone to turn over ALL of their web service code? Any app meaningful will be making calls to outside web services. I'd refuse the prize money if they demanded all of the server side code as well.
That is exactly my point. It is extremely alarming and really something people should consider before submitting to this contest. As soon as you submit, whether your win or not, you may very well have just given them their next idea for nothing in return.