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The big news is that the carriers forced it onto almost all smartphones (Android, Blackberry, iPhone). The blame needs to be pinned on them.
I'm curious about which carriers.

Are we just talking about US carriers or carriers worldwide? I'd think "Carrier IQ" wouldn't fly under stricter European privacy laws (even if it is OK in the US, which some people say is an open question). Is that right?

Absolutely. That was the very question I thought of as I posted that. I have a suspicion it's US carriers.
in fact its probably the same exact carrier whose parent was given the right to spy on amercians for the us government after laws were broken..
Well I live in India and i will look for CareerIQ in my bro's galaxy. The handsets here are contract free and GSM.
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How does that work with the iPhone, I wonder? Android phones have custom firmwares for each carrier, but I thought that everyone downloaded the same update package in iTunes. Am I wrong?
I have a Samsung GalaxyS running Android on Rogers (rogers.com) up in Canada and there is no CarrierIQ installed. Maybe we need to create a spreadsheet so we can track which phones / providers have this installed.
CarrierIQ - does this mean that contract-free phones don't have it installed?
Of course not. If you bought the phone through a carrier that has CarrierIQ normally installed, then why would they make an exception for the 0.1% of customers who bought a smartphone off-contract?

So no, the name has nothing to do with it.

Who said anything about buying through a carrier?
You kind of implied it when you said contract-free instead of not from a carrier.

At least here in the States, the majority of contract free and prepaid phones for sale are associated with a particular carrier.

I avoided saying "unlocked" because it would imply it was locked at some point. What should I call them?
In Australia the retailers generally call it a 'handset only' purchase
The convention I've seen is "SIM-free."
I'd hope Google knew how to track users efficiently without third-party help.
"We're still wondering why Google would reject Carrier IQ from its flagship devices but allow phones with the software to pass the various Android compatibility tests required to license its apps like Gmail, Google Maps, and Android Market."
Google doesn't include Bing in its flagship devices. That doesn't mean somebody can't install it later if they want to.
That's not the point - the point is that apps on Android are sandboxed so that Angry Birds can't read call premium phone lines or extract your calling history.

Google approved builds which included a rootkit that could do all these things

Looking at the latest Wikileaks release (http://wikileaks.org/the-spyfiles.html) it makes me think that this Carrier IQ thing, if it is used for getting to our personal data, is just a pixel in the complete picture.