According to Wikipedia, a Web bug is an object that is embedded in a web page or e-mail and is usually invisible to the user but allows checking that a user has viewed the page or e-mail. One common use is in e-mail tracking, which swindles around your privacy.
The Mail application in the new iPhone 3.0 software has a special switch that will make web bugs ineffective. Technically, it works against all remote images, whether web bugs or just standard parts of a newsletter you are subscribed to, but the iPhone 3.0 security update release notes mention this as a “security related” feature.
In this example, I created a clearly visible image, but that is just you can see a clear difference in e-mail presentation.
I have sent a sample “marketing email” that embeds a remote image email@example.com. Let’s say I am a mass spammer who wants to check out the livelihood of his email database.
Opening an email on a 2.* version of iPhone will clearly show the image:
By grepping the contents of the access log on the remote server where the image is hosted, you could clearly see a specific request for the image in question:
Now, a spammer is sure that your e-mail address is active and he can reuse it or resell it to others.
The new version of iPhone software was just released a couple of hours ago and the mail application received a boost. Now, you can chose if you would like remote images to show or not.
The default option is still “On”, as majority of users will still like to have remote images in their e-mail. Those sensitive to their own privacy, can just turn it off and the same e-mail will show up like this: