Carrier IQ, an embedded analytics company, said in a statement last week the software was designed to help mobile network providers "diagnose critical issues that lead to problems such as dropped calls and battery drain."
The Mountain View, Calif., company had initially threatened to take legal action against 25-year-old Trevor Eckhart after he made the tracking claim but later apologized to Eckhart and the Electronic Frontier Foundation, an anti-censorship group that had come to Eckhart's support, Wired.com reported Wednesday.
Carrier IQ said the software was installed for quality control on Android, BlackBerry and Nokia phones and does not record keystrokes, does not inspect contents of communications and does not sell the information to third parties
Eckhart, however, posted a video on YouTube Monday that appears to show the software logging keystrokes of text messages and encrypted Web searches, Wired.com said.
The data is sent to Carrier IQ's servers, Wired.com said.