According to tweets from Pokevision, one of the more popular apps, it is offline, and there is little they can do about it at the moment. "We wish we had some news for you. At this moment, we are respecting Niantic and Nintendo's wishes. Will keep you guys posted." A later tweet makes it sound like it was inevitable. "I promise you 100% we kept it up as long as reasonably possible. Maybe things will change in the next few days - let's hope."
Fans weren't happy, with tweets and posts bemoaning the loss of any kind of tracking, especially now that Niantic has removed the footprints for nearby Pokemon because of the so-called "three-step" bug that showed every neaby critter as three footprints away. Niantic has promised that a fix was coming, given that it initially worked before a very early patch broke it, so hopefully the elimination of the feature is only temporary. The game still shows a nearby list, but without any indication of how far away the Pokemon are.
The move isn't too surprising given that the tracking apps use Niantic's API, which violates the game's Terms of Service. At least one person has gotten as Cease and Desist for sharing that API on Github.