Google went into the smartphones of about 260,000 Android smartphone users who had downloaded infected apps, and remotely removed the infected apps, as described in their blog. They pushed a service called Android Market Security Tool March 2011 unto those users’ phones.
This action has of course raised privacy concerns. As with everything that Google provides, Google reserves the right to do what it wants with your data. This LA Times article summarizes Google’s actions.
Apparently Apple has similar control over its customers’ iPhones.
Developers for Android must register with the Android Marketplace before they may upload apps, so it should be easy to identify the bad guys. It’ll be interesting to see what “law enforcement” (who? The Internet police?) mentioned by Google does with the evidence.