Apple, Google, and Location: Is It All About Advertising?

Politicians and privacy experts demanded answers of Google and Apple Friday following the discovery that smartphone software from the tech giants regularly transmits information about a user's whereabouts back to the companies.

Both Google and Apple remained mum about why the data is sent. But Apple may already have tipped its hand in explaining one reason the iPhone phones home: advertising.

The company's iAd network, launched last July, quite regularly receives location data from its gadgets, stores it in massive databases -- and uses the information to send just the right ad to your cellphone.

"Information is transmitted securely to the Apple iAd server via a cellular network connection or Wi-Fi Internet connection," explained a letter Apple sent to U.S. Rep Edward Markey, D-Mass., on July 12 in response to his request for information. "The latitude/longitude coordinates are converted immediately by the server to a five-digit ZIP code."

"Apple then uses the ZIP code to select a relevant ad for the customer," the letter explains.

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But many remain concerned that the information isn't being kept confidential -- or even kept safe at all.

Alasdair Allan and Pete Warden discovered that the operating system powering the iPhone and iPad stores a file of everywhere you go -- every trip to the park, family vacation and more.

"It became clear that there was a scary amount of detail on our movements [in the iPhone]," they said, data that could be used by "anyone from a jealous spouse to a private investigator to get a detailed picture of your movements."

Google Android phones collect location every few seconds and transmit that data to company servers at least several times an hour, according to research by security analyst Samy Kamkar.

Google purchased mobile-advertising provider AdMob in November 2009 for $750 million dollars. It's possible the company uses this information for similar purposes. But regardless, this isn't new information, said Iain Gillott, president of wireless industry analysis firm iGR. It's gone on for ages, in fact.

"I don't think there's anything too sinister going on," Gillott told

"The iPhone forever and a day has tracked location and stored it on the phone. It puts it in a locked file that's buried within the operating system. That’s not new. It's done that for years," he told

Gillott speculated that Apple may be using this information for network regulation, as well as advertising.

Indeed, countless apps use location information in a variety of ways. Check-in apps such as Foursquare use your location -- and send it to other people. Google Maps relies on your location. Mobile games, productivity tools, restaurant recommenders and more all need to know where you are to give you data.

"The issue is how aware we are as consumers of what we're trading and what we get in return," Noah Elkin, senior analyst at eMarketer, told

And that's where the two companies have gotten into hot water.

Both companies have explicit policies and mechanisms to turn off the tracking, of course. But Google's mobile privacy policy is almost stunningly vague. "If you use location-enabled products and services, such as Google Maps for mobile, you may be sending us location information. This information may reveal your actual location, such as GPS data, or it may not, such as when you submit a partial address to look at a map of the area."

Google and Apple are racing to build massive databases capable of pinpointing people's locations via their cellphones, the Wall Street Journal reported. These databases could help them tap the $2.9 billion market for location-based services -- expected to rise to $8.3 billion in 2014, according to research firm Gartner.

Anyone who collects location information wants to do so ultimately with the idea of better targeting location and marketing," Elkin said.

But it's not all about location. Pairing that information with other customer data could allow a company to build massively detailed profiles of who you are and where you are.

"Just because you know I'm in Austin doesn't tell you anything about me," Gilliott said. But pull all the other activity and everything else I do and you can build a really good profile of me.

"Location is an enabler. It makes information about you hugely more useful," he said.