Searchengineland reports that the iPhone Maps application has started to serve Geo-targeted ads by Google. They’ve got the screenshots to back it up as well. It isn’t immediately clear whether or not Apple will share the revenue stream with Google, although this might be a possible reason for them to consider doing mapping on their own.
Update: They are also throwing in some poorly done user generated content.
FWIW, we think this is a great idea and really the future of advertising – but just not something Apple may not appreciate in one of its main apps.