"From there on your phone would be compromised. Every phone call, every piece of data would be sent to someone using this software, who could track your location, turn on your microphone, turn on your camera. Steal all your password, you name it," said Mike Murray with Lookout.
Murray is the vice president of security research at San Francisco based Lookout, which focuses on mobile security, says a company is selling hacking software to governments.
"We believe this is being used around the world to compromise mobile phones and spy on people that governments want to spy on," said Murray.
Lookout was able to identify vulnerabilities within Apple's current system. They alerted Apple about the spyware.
Apple issued an urgent alert for all iPad and iPhone users. There's now a software update which should patch the holes in security.
"Everyone should be concerned about this because in the society we live in everyone is one their phone and everything is on our phone," said Trish Bantigue, iPhone user.
Murray suspects the hackers are after high value targets, but urges all users to install the update immediately.