[mbrubeck]

The iPhone OS doesn't allow background processes for third-party apps. So normally Loopt would have no way to update your location except when you open their app. The carrier deal lets them get location data straight from the carrier, whether their app is open or not:

http://www.theiphoneblog.com/2009/09/04/loopt-att-work-399mo...

[agent86]

I imagine this also generates some revenue for Loopt as well. I'd be surprised if AT&T took the entire thing.