Did Apple just ban location based ads in iPhone apps?

There may be trouble ahead for iPhone apps (and mobile ad networks) looking to make use of location-based advertising.
In an 'App Store Tip' posted on its iPhone Developer website, Apple appears to have nixed the idea.
"If you build your application with features based on a user's location, make sure these features provide beneficial information," says the tip.
"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."
Of course, the grey area comes in the use of the word 'primarily'. If the main use of location in an app is for the app itself - think social location apps like Foursquare and Gowalla - is it okay to include ads targeted by location?

How about sponsored listings within augmented reality apps like Layar? And, if we're getting really cat/pigeons about this, what does the ruling mean for Google's plans for location-based advertising within iPhone apps?
Apple has always made a point of stressing that consumers are its prime consideration when it comes to its App Store policies - including app approvals.
The new move can be seen as the latest example of the company trying to protect its customers from being pushed intrusive ads with no real benefit.
However, there's another angle, which is to wonder how Apple's new mobile advertising division - the recently acquired Quattro Wireless - will fit into this.
There's a page on the Quattro website covering its targeting and ad serving technology, which specifically mentions that campaigns can be targeted by "location and time".
The conspiracy theory already being discussed in the blogosphere is that at some point, developers wanting to use location-targeted ads will be forced to use Apple's own ad units - and thus not those of competitors like Google-owned AdMob.
Time will tell, but for now, the grey areas around what counts as 'primarily' using location for ads will be what concerns developers most.

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