Google introduced Search with My Location for iPhone 3.0

Search with My Location for iPhone 3.0 has been introduced by Google. Search with My Location from Safari is available in English in the US and UK. You can also search with My Location using Google Mobile App, available from the iPhone App Store.

From the official Google Mobile Blog:

As of today, when you visit www.google.com from Safari on your iPhone 3.0, you can choose to turn on My Location by tapping on the link on the homepage. When you tap on the "update" link, your location will be updated and displayed right there on the homepage. Whenever you want to refresh your location, just tap the "update" link. Testing this in New York, my search for "jazz clubs" returned a handful of places within walking distance. I picked one, tapped the phone number, made a reservation, and we were set for the night.

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