Do people repeatedly lose those items to warrant a wide net like Apple's solution? I imagine people more often misplace those items in familar places—not lose them in the wild. If that's a habit, they need self-awareness or medical attention, not a safety net.
As alarmed as the public is about privacy errosion, and as often as headlines reveal liberties taken by big consumer tech companies, you'd think people would think twice about allowing those companies to add more features that involve yet more surveillance.
Answer to your first question, yes they do, saying people can just give up 5-10mins once a week looking for a wallet in the house is like asking people to stop sending emails and go back to hand writing and posting a letter.
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I don't use Tile and I wasn't aware of the provision in the EULA that they shared your location data. That is a deal breaker for me, if I were in the market for such a device, I would definitely avoid Tile. However, I am very interested in Apple's version. I would love to put one on each of my bikes in case any of them were ever to be stolen.
Because of their small size and likely affordability, I could see these type of devices being abused for covertly spying on people (i.e. epoxy a strong magnet on one and stick it to the underside of someone's car to find out where they live).
They need location data as you are not only looking for your tile but also looking for every tile around you to help people find their items as they are only bluetooth and not gps. They are using your phone as a middleman. The location is to send the location of detected tiles, not you specifically. You can't do that unless you have location services always on, but since its iOS you can still disable always on in system settings but that would mean you're no longer making Tile worth it to you and others who also use it.