In China, the iPhone's maps app, which is powered by Google Maps, must show the borders the way China insists they should look like. For example, the Arunachal Pradesh region shows up as part of China, even though it's part of India. Up until now, Chinese iPhone owners who took their device outside of the country's borders, or who used a VPN to fool the app into thinking they were elsewhere, would see the more accurate version of Maps.
With the iPhone 4, however, Apple has apparently agreed to hardwire the Chinese version of maps, meaning users will see their phones display the borders as the Chinese government demands, regardless of where they are. Furthermore, the censored maps data is missing a lot of street data for the rest of the world.
On top of all this, Ogle Earth also reports that users of China's iPhone 4 are finding that searches conducted via Safari's Google search bar are getting redirected to Google.cn. They have to manually click a link to get redirected to Google.com.hk, the search giant's unfiltered Hong Kong site, much like how the redirect process works on computers in China.
Once again, the situation becomes worse when we realize the Chinese iPhone 4 forces users to redirect from Google.cn no matter what their phone's region is set to (and a VPN makes no difference). Everywhere else in the world, the iPhone 4's Safari search bar is dependent on their regional settings, meaning Apple has been significantly tweaking the Chinese iPhone 4 to appease the government. Previous Chinese iPhone versions allowed users to sign on to a VPN to bypass Google.cn entirely.
These decisions make both Apple and the Chinese government look worse than the two already did with previous crippled versions of the iPhone. Apple's first iPhone in China was an iPhone 3G without WiFi support.