But Apple has warned developers against using iPhone OS's Core Location framework primarily to deliver location-based advertising.
An announcement in the iPhone Dev Center states that location-awareness should be used to provide "beneficial information."
Developers who make their primary use of Core Location to deliver geographically targeted advertising are warned that "your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store."
So there's still no problem with funding free apps with advertising (or subsidising paid apps the same way). All Apple's saying is that if an app doesn't have significant location-based functionality, it can't deliver location-based ads.
But some people seem unhappy with the ruling - please read on.
Unless you're particularly fond of conspiracy theories, a more plausible explanation is that Apple doesn't want iPhone users to get into the habit of blocking Core Location.
Core Location only works after the user has given permission for that particular app to access location information. If iPhone (and, in the coming months, iPad) owners started noticing that granting permission merely resulted in the appearance of geographically-localised ads, they may routinely deny such requests.
The privacy minded will probably do so anyway ("Let some advertising company see where I go and potentially determine where I live and work? No thank you!"), but Apple wouldn't want that spreading to The Rest of Us.
Firstly, location is a key part of some mobile applications and a lesser, though still important part of others. If people don't feel they can trust Core Location, the user experience will be degraded.
Secondly, Apple does have a financial interest (Quattro Wireless) in delivering mobile ads according to location and other criteria. Any user reluctance to allow apps to read the device's location works against that interest.
And thirdly? - see page 3.
So Apple's prohibition on using Core Location primarily to deliver location-specific ads appears to be as much in its customers' interests as its own.