Today Apple released a Q&A about the location data that's stored on the iPhone. In the statement, the company says broadly that it does not track the iPhone's location, and that the data, which is currently stored in an unprotected file, will be encrypted in the next major update of iOS.
In the statement, Apple admits that iPhones send location data to Apple to maintain a crowd-sourced database of Wi-Fi hotspots and cell phone towers, as many have suspected. However, the company says the locations recorded can be up to 100 miles away from the where the phone actually is, and that the data is sent anonymously.
Apple further explains that it's creating the database to provide better location services on the phone. By using the crowd-sourced locations of cell towers and hotspots, the phone can more quickly locate the user than if it were using GPS satellite data alone. Putting the entire database on every user's phone would be untenable, though, so an iPhone requesting location services accesses a subset, or cache, of the database. It's this data, not necessarily data specifically generated by the user, that's stored in the unencrypted file, "consolidated.db."
At the same time, though, the company effectively admits that retaining such a lengthy and comprehensive location record on the phone—ever since the user upgraded to iOS 4, or about a year for most users—is unnecessary to maintain such a database. Also, backing the file up to a user's computer is clearly not needed either. Apple says it plans to do four things in the next major update of iOS: