I guess it depends on the government. Many have some kind of "you can't operate here unless you meet certain criteria" rules that require implementing special software. Usually those rules center around copyright (e.g. must allow moderator deletion to respond to DCMA requests) or safeguarding or other kinds of government-mandated moderation. But it is certainly possible for any government to force any company to develop any software as a price of doing business in that country.

So yes, now that the technology exists and they have proven that it can be integrated with their system, the damage is kinda done. Of course, if Apple now has to publish a different version of their software for, say, the Afghanistan market than they do the surrounding areas, that's a big red flag to people in Afghanistan that Apple have done something shady, likely at the behest of the current Afghan rulers. If that spyware is distributed on every iphone globally, and it's merely picking up on geolocation or some kind of network indicator, there is no smoking gun - so the first time people will know that this has been tuned immorally is when people start disappearing.

That's why a lot of the battle should probably now be "Make this software illegal in your country", because then the countries distributing "custom" versions are likely to be infected with this spying capability.