• by Mark Walsh  @markfwal, February 5, 2010

A warning from Apple it will ban iPhone applications with advertising linked to a user's location is rippling through the tech blogosphere in light of the company's recent acquisition of mobile ad network Quattro Wireless.

In a notice to iPhone developers , Apple said it will reject apps that use location information to deliver targeted ads:

"If you build your application with features based on a user's location, make sure these features provide beneficial information. 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," states the post.

One reading of the instructions is that Apple wants to keep location-based advertising to itself in connection with the Quattro deal. "Quattro Wireless was acquired because Apple wants to offer an advertising solution for developers," said Jeremy Horowitz," editor in chief of iLounge, covering all things Apple. "It's a win-win from Apple's perspective if it can share revenues, and the developer can offer low-priced or free applications and content."

So far Apple has said little publicly about its plans for Quattro. But there's reason to believe the tech giant wants to combine its user data and geo-location technology with the Quattro's network of advertisers and mobile ad expertise. Horowitz says while Apple wouldn't necessarily stop developers from using an ad network it chooses, it will provide incentives to use an "official" Apple-Quattro solution.

Other mobile experts downplay the Quattro angle, stressing Apple's developer guidelines are mainly aimed at blocking spammy advertising. "I would argue that Apple is saying 'don't just use location for ads alone,' wrote Greg Sterling, on the i2G blog of Opus Research. Apps have to provide "beneficial information" in the form on non-advertising content and services, he added.

Sam Altman, CEO of mobile social mapping service Loopt, said in an interview Friday that too many iPhone apps that use location data only to target ads. "There have been an increasing number of apps that have nothing to do with location, that ask for your location to serve ads, and users get confused about that," he said. As long as developers can show their location-based apps aren't mere ad vehicles, he thinks there shouldn't be a big problem.

Of course, Apple's approval process for apps is notoriously opaque, so what constitutes "beneficial information" will be a judgment call on the part of its gatekeepers. And you can make an argument that any media outlet, a newspaper, TV program or Web site, is nothing more than a means of delivering advertising. And isn't digital advertising in particular meant to blur the line between content and advertising?

One thing that's clear is if Apple is jumping into mobile advertising, it has a greater stake in insuring apps in which ads might run--and the ads themselves--don't alienate users. How much farther it will go to tighten up advertising without completely antagonizing developers is the question. But if Jobs already thinks mobile ads suck, as BusinessWeek reported, then developers may be in for more surprises.