Moving swiftly amid a rising tide of resentment about invasion of user privacy, Apple's taken a bold step and released a public statement on the matter in the form of a directed question and answer article. Just as we've noted , Apple stresses that it does not track user location--the company never receives information that could identify you and your absolute location history. It does, however, admit that "the creators of this new technology (including Apple) have not provided enough education about these issues to date." This claim is partly de-fanged by also noting that the matters are technical, complex, and easy to misunderstand.
Apple's explanation rests on some facts about how smartphones work that most users (and feverish journalists  and senators ) never think about. "Providing mobile users with fast and accurate location information while preserving their security and privacy has raised some very complex technical issues which are hard to communicate in a soundbite," Steve Job's firm notes. And in fact the iPhone file that's got everyone of a bother is not an absolute location log. Rather, it’s "a database of Wi-Fi hotspots and cell towers around your current location, some of which may be located more than one hundred miles away from your iPhone, to help your iPhone rapidly and accurately calculate its location when requested."
Apple's saying the file is, in effect, a look-up table based on existing crowd-sourced data that's downloaded to your phone on the fly. Why? It's very simple, actually: "Calculating a phone’s location using just GPS satellite data can take up to several minutes," which is a phenomenon we're all familiar with (even though the math behind this is actually incredibly impressive). The difference between stand-alone GPS units and cell network-connected smartphones, however, is that phones can use A-GPS (Assisted GPS) to give the location an approximate starting point. This "can reduce" the time taken to acquire a location fix "to just a few seconds by using Wi-Fi hotspot and cell tower data to quickly find GPS satellites, and even triangulate its location using just Wi-Fi hotspot and cell tower data when GPS is not available (such as indoors or in basements)."
The article goes on to explain that the locations file that researchers uncovered is just this log of crowd sourced location data. It could, of course, be used to approximately track your location history--except that Apple never gets a look at it combined with any identifiable info about you as a user. The file isn't encrypted, and it is backed-up onto your computer when you sync your phone--where it is encrypted if you chose that security option from iTunes' preferences.
Anonymous location data is being collected by Apple to flesh-out this crowd-sourced look-up table, and also "anonymous traffic data to build a crowd-sourced traffic database with the goal of providing iPhone users an improved traffic service in the next couple of years."
There is a bug, however: The location file shouldn't be updated when you turn off location services in the iPhone as a privacy measure.
Apple hence promises to fix the bug "shortly" as part of a software update. This refresh will also slash the size of the "crowd-sourced Wi-Fi hotspot and cell tower database" stored the phone, remove the backing-up code, and also delete "this cache entirely when Location Services is turned off." Plus, in the next "major iOS software release" the cache will now be encrypted on the phone.
Does that seem a plausible explanation and a decent, fast response to close the matter to you? And despite this storm in a teacup, there's something everyone's forgotten: Beginning in 2001 the FCC has mandated by law  that your cell phone network track you.
Update: Reading Apple's Q&A post again, there's a huge and surprising hint hidden in plain view--"traffic data." Apple's collecting data on traffic...as in cars on roads, based perhaps on anonymous location data and relative speed? We're assuming it's this kind of traffic, rather than Net traffic. And if that's true, it's big news that suggests Apple's going to make good on its extensive patent portfolio  and release its own advanced navigation apps.
Image: Flickr, chokola .