From the iPhone Dev Center:

If you build your application with features based on a user’s location, make sure these features provide beneficial information. 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.

Apple’s stance that geotargeted advertising doesn’t benefit the user is the strongest evidence I’ve seen yet that Google and Apple aren’t on a collision course.

Update: The thing is that every significant ad delivery platform uses location as a targeting signal. Ad networks geotarget off of the requesting IP address if not something with greater granularity. If Apple solely doesn’t want the user to use the Core Location API for this purpose (a position that is still anti-user) then their note is written very badly because, as it’s currently written, it means that using an ad delivery network that happens to use geolocation — even by IP guesstimation — will be returned to the developer until that capability is removed. In many cases thought this is completely out of the developer’s control unless they change ad delivery platforms.