All iSpy conspiracy bullshit aside, you are probably more interested in what your iPhone does with location data. Well, if you opt-in to the iPhone's location services, detailed—but anonymized—location data is transmitted back to Apple on a regular basis.

Gadget Lab reminds us of a letter Apple general counsel Bruce Sewell sent to a couple of Congressman last year explaining how and why Apple collects location data. (Wired's hosting the letter here.) Basically, if you've got Location Services turned on, whenever you request current location data (like via an app), Apple collects info about nearby cell towers and Wi-Fi hotspots. If you happen to be using GPS, it'll collect the GPS coordinates too. That data's then transmitted to Apple every 12 hours over "secure" Wi-Fi networks, anonymized with a "random identification number generated every 24 hours by an iOS device," so neither Apple nor anybody can personally identify you.

If you remember, Apple started doing its own location services last year (from iOS 3.2 onward), instead of using Google or Skyhook's location data. So, it needs to build and maintain its own database of known tower locations and Wi-Fi hotspots—that's where this info comes in. You're an official location scout for Apple, in other words. When your device asks where it's at, it hits up this database before zeroing in with GPS.

Not too crazy, though it doesn't make the ease with which your location history can be extracted from your Mac or iPhone any less unnerving. Also, it makes the lack of a purge after the data's transmitted to Apple seem more and more like a mere oversight. More on this is at Gadget Lab: [Gadget Lab]