Is Apple's iPhone tracking a bad thing?

By now, you’ve probably heard that your iPhone or iPad with 3G may be tracking your location data on an unencrypted file and this immediately raises concerns about privacy and security. Let’s take a look at what this means and if you should really be freaking out about this.

Basically, the iPhone and iPad 3G create a hidden file which tracks your location and it is brought over to your computer when you sync it with iTunes. The file doesn’t come with encryption but there are options to do this in iTunes.

What really freaks people out is data visualization tools like this which can give you a time-lapse view of where you’ve been. To be fair, this data hasn’t proven to be highly accurate, as it appears to use cell phone tower information to get a general idea of where you are and where you’ve been. It’s still quite a trip to see exactly how much information has on you though.

Should you be freaked out and dump your iPhone? It’s definitely shady that this happens without the user’s permission (someone should be punished) but this is the brave new world that we’re living in and each person has to decide what they are comfortable sharing.

The Groupon check-in discount paradise I wrote about would be absolutely impossible without precise location-based data. Is getting 70 percent off of a pizza worth letting Groupon, your carrier, the pizza shop and probably advertisers know where you are? Maybe not but the next wave of innovative mobile apps are going to use our location to be more relevant and powerful.

I guess my main issue is with responsible disclosure and giving people the opportunity to opt-in. It’s actually been known that Apple can track your data but it says it anonomyses the data but being super clear to end users would make most of this negative press go away.

The anger and frustration occurs when companies try to sneak this stuff in under our noses. The much-buzzed about Color app raises a few eyebrows because the social photo-sharing app turns on your iPhone’s audio recorder without even telling you. The company says this is only to determine the noise levels of the scene being shot and no audio data stays on its servers but the lack of disclosure up front is quite disturbing.

Don’t think you can get away from this by ditching iOS for Android, as Google wants as much data about you as it can in order to sell more effective advertisements. Just take a look at Google Latitude to see how much location data Google can know about you if you grant it permission.

It’s up to us to demand that these companies lay out what type of data it collects, why it is collecting that data and how that can be beneficial to consumers. From there, you can decide what you’re comfortable with.