The reason? Because the building resembles the Ka'ba in Mecca (pictured below), is called "Apple Mecca," (by whom?), is open 24 hours a day like the Ka'ba, and "contains bars selling alcoholic beverages."
Ka'ba means cube. It is the first place Allah was worshiped. From the outside it does not look very exciting. It is made of concrete blocks. Inside it is decorated with texts from the Qu'ran.
I was just at the Fifth Avenue Apple store in NYC and don't remember them serving alcohol. The report appears to have misunderstood the intent of the "Genius Bar" and the "iPod bar."
A Middle East research organization reports that Apple's flagship retail store on 5th Avenue in midtown Manhattan (between 58th and 59th) is offensive to Muslims. The report cites an Islamic Web site urging Muslims to spread the word in hope that "Muslims will be able to stop the project."