According to Adups, the company behind the software, website, it provides software to two of the largest cellphone manufacturers in the world, ZTE and Huawei. Both are based in China.
A spokesperson for Huawei said the company took its customers' privacy and "security very seriously" and that it works "diligently to safeguard that privacy and security".
"The company mentioned in this report is not on our list of approved suppliers, and we have never conducted any form of business with them," the company said.
One American phone manufacturer, BLU Products, told the Times 120,000 of its phones had been affected and that it had updated the software to eliminate the feature.
A Google official told the Times the company had told Adups to remove the surveillance ability from phones that run services like the Google Play store.
The Times reported Kryptowire discovered the problem when a researcher bought an inexpensive phone, the BLU R1 HD, for a trip overseas. While setting up the phone, he noticed unusual network activity and analysts noticed that the phone was transmitting text messages to a server in Shanghai and was registered to Adups.