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what does compatibility with ARC mean exactly?

ARC is Apple's new scheme for memory management (more info here: http://developer.apple.com/library/ios/#releasenotes/Objecti...) and there are a bunch of requirements (see "ARC Enforces New Rules") that have to be met for an app to be ARC-compatible. Our SDK also has to follow those rules in order be used painlessly in an ARC-based app.

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