According to Gizmodo, “If you have any decently modern Android phone, everything you do is being recorded by hidden software lurking inside. It even circumvents web encryption and grabs everything—including your passwords and Google queries.”
Gizmodo goes on to say, “Worse: it’s the handset manufacturers and the carriers who—in the name of "making your user experience better"—install this software without any way for you to opt-out. This video, recorded by 25-year-old Android developer Trevor Eckhart, shows how it works. This is bad. Really bad.”
The spying software is developed by a company called Carrier IQ. In their site, the company says they are "the only embedded analytics company to support millions of devices simultaneously, we give Wireless Carriers and Handset Manufacturers unprecedented insight into their customers’ mobile experience."
The researcher who discovered this is Trevor Eckhart. The problem is that it does a lot more than log anonymous generic data. It grabs everything.
What can you do? Unfortunately, not much. The hidden spyware is always running, and there’s no option in any of the menus to deactivate it. Unless you’re a grade-A blackbelt hacker, you’re out of luck. Even Eckhart, who is a developer, finds it difficult to remove
For the latest on this growing legal and ethical issue go to http://www.theverge.com/2011/11/30/2601695/carrier-iq-controversy