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The statement is in a question-answer format that frames the questions with a characteristic Apple viewpoint. Apple flatly denies that it is either tracking or logging users' locations, though the statement doesn't explain the difference, if there is one, between those two terms.
Instead, Apple is simply "maintaining a database of Wi-Fi hotspots and cell towers around your current location, some of which may be located more than 100 miles away from your iPhone, to help your iPhone rapidly and accurately calculate its location when requested."
Nevertheless, Apple promises two free software updates to iOS to address specific issues. In the "next few weeks," an update will:
* reduce the size of the crowd-sourced Wi-Fi hotspot and cell tower database cached on the iPhone
* stop backing up this cache
* delete this cache entirely when Location Services is turned off (currently, when users shut off the phone, it sometimes keeps updating the Wi-Fi and cell tower data, an activity that Apple says is caused by a software bug)
Secondly, the next major iOS software release will encrypt the iPhone's cache of Wi-Fi hotspots and cell tower locations. Today, Apple says this cache, a subset of the entire location database, is "protected by not encrypted" on the phone. The backup, via iTunes, on a Mac or PC can be encrypted if the user selects the option for encrypted backups.
The Apple document is available online in full.
The statement begins with the question "Why is Apple tracking the location of my iPhone?" The answer repeats Apple's consistent position that the company "is not tracking the location of your iPhone. Apple has never done so and has no plans to ever do so." (A point Apple CEO Steve Jobs reportedly made as well in an email exchange with a customer earlier this week.)
The second question is: "Then why is everyone so concerned about this?"
Apple's answer is that "users are confused, partly because the creators of this new technology (including Apple) have not provided enough education about these issues to date."
"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."
The company "is not logging your location," according to the statement. Instead, the iPhone is maintaining a Wi-Fi hotspot/cell tower location database. The reason for doing so is to let the phone calculate your location faster with this additional data, than it can do by relying on GPS satellite data alone. (A recently published Apple patent application seems to describe the underlying technology.)