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Apple will be hosting and delivering the ads. I would guess that they will limit the size of the ads so they won't hog too much bandwidth. Nothing more annoying that waiting for a page to load because some third-party ad server is overloaded. Using HTML should keep them relatively small as well. Ads are a necessary evil unless you're willing to pay. There are ads on this site as I type this. But being Apple, there will likely be guidelines for what is or isn't acceptable. Apple doesn't want to completely ruin the user experience. In a way, it's quite smart of them to take control in this area.
And you can bet Google will now be offering a similar service for Android apps.