A big feature of iOS 4 is Apple’s new advertising platform, iAd, and one of iAd’s defining features is the ability to collect geolocation data and share it with advertisers. I imagine the technology will one day allow advertisers to know what aisle you’re browsing at the grocery store in order to feed relevant advertising.
Because Safari 5’s Reader function typically hides the ads on the website you visit, we should probably expect targeted ads from iAd to appear in the currently clutter-free format. iAd will use the data collected from your iPhone, and eventually will probably push advertising into Safari’s Reader mode.
Luckily, Apple allows you to opt-out of location-specific advertising, at least in iOS (formerly iPhone OS). Simply point your browser to oo.apple.com. It won’t disable the advertising, but it will prevent your location data from being shared with Apple.
Apple does take privacy seriously. If you take the time to read the full terms and conditions of any piece of software, you know that they’re pretty detailed and often scary. Apple says “You may still see ads related to the contrent on a web page or in an application or based on other non-personal information. This opt-out applies only to Apple advertising services and does not affect interest-based advertising from other advertising networks.”