Apple sent an article to the developers currently using the iPhone OS about the “proper” use of GPS location in apps. Developers can use the GPS coordinates of your iPhone for pertinent information related to the application itself… geo-tagging pictures, local services available (Yelp, Urbanspoon, Now Playing), and other location-aware features.

Apple specifically told developers this:

“If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store.”

Apple recently purchased a mobile advertising company called Quattro Wireless. It is widely assumed that Apple will use this ad firm to bring developers an easier way to incorporate ads into their apps using a custom-developed ad structure. Others have suggested that Apple will restrict location-aware ads to their own network. We disagree with that possibility as it would lock down more iPhone capabilities to those following “Apple rules.” If that suggestion becomes reality, you can bet (heavily) on a lawsuit slapping Apple across the face: that’s why we don’t think it will ever happen.

Are location-aware ads reasonable for the iPhone OS? That really depends on who you ask. We have several friends who think it can’t get here quickly enough. We’re not so sure… if anything, it should be something that you can disable from the iPhone settings. Ads completely? No, just the ads that target your current location. Give us an option to use generic ads if we don’t want companies knowing our every move… yeah, that’d be nice.

Source