Apple warned its developers not to use iPhone applications that use the smartphone's global positioning system to distribute location-based advertising, but instead use CoreLocation, the API that allows developers to find your location based on GPS coordinates and other data, to give users "beneficial information.

The move comes shortly after Apple acquired its own mobile advertising firm, Quattro Wireless. Quattro offers a platform for distributing advertising to mobile devices which is expected to become a big revenue generator for advertisers and publishers.

It has filed patent for location-based targeted advertising, especially in relation to offering currently playing songs or videos at a particular location for purchase via iTunes. This moves suggests that Apple merely wants to avoid giving out iPhone user's location data to third parties.

Initially Google's had announced to buy AdMob, a mobile display advertising provider, for $750 million in an effort to focus on the ability to deliver relevant ads when people use their phone for search queries.

Gartner predicts more than 4.5 billion mobile applications will be downloaded worldwide this year, bringing in $6.8 billion to online app stores. Downloads and revenues are set to more than quadruple by 2013