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I thought by Apple having its own tightly-controlled App Store, we wouldn't be seeing such apps? I guess we were wrong. So much for that hypothesis.

is this one of the features of the 100 new API's that are in OS 3?

This is true, but this App uses it in a malicious (not useful) way. This API was originally intended to give offer you points of interest (or stores, etc.) nearby, not to track where you are. And to have this question asked everytime a new ad pops up proves is malicious (and "pestering").
 
I can't seem to find any of thier apps on the App Store...

Did they get pulled already?

Or are they just the ad service?
 
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