the senator is an ass
The existence of this data has been known for some time now.
Further, some googling suggests that Apple had already responded to some congressmen's inquiries on the subject, again, well before it got this level of publicity.
From what I've read, they apparently collect locations, WiFi MAC addresses, etc, _anonymously_ (not retaining information that would track any particular person or phone, unless you _choose_ to track a lost or stolen iPhone).
Now...why would they do that? I just thought of one reason.
Geolocation by WiFi MAC address (the only way iPod touch or non-3G iPad can geolocate, if they can't use cell towers and don't include GPS) depends on a database of locations and WiFi MAC addresses. Apple probably has previously used one licensed from Skyhook or Google. I imagine that was built with equipment carried in delivery vans, or in the same vehicles that take Google's "street view" panoramic photos. Licensing access to that database must cost Apple something.
Now...what happens? Somebody says "duh, an iPhone has WiFi and a GPS, that means we've got a fleet of surveying equipment already deployed." Doesn't matter that they can't schedule the coverage; sooner or later, someone is likely to drive near just about every fixed WiFi AP on the planet with an iPhone. Now...the data quality wouldn't be as good...but even whoever did the earlier database must've had that problem (people with mobile access points would confuse the heck out of things, for instance). So maybe it takes multiple hits to confirm something as fixed, or to improve the accuracy. But eventually you still get to the same end result - a WiFi MAC address vs location database that Apple owns free and clear.
They might even be able to do some work with cell tower location data, and perhaps produce data good enough to compete with the existing geolocation database providers. After all, Apple does have to maintain some infrastructure for various functions: their notification servers, software update servers, etc. Anything they can get as a side-effect of the normal operation of iDevices and their infrastructure, that helps pay for it, lets them make a bigger profit and/or be more competitive (remember, for all Apple's rep for high prices, the iPad 2 supposedly is as well or better priced compared to competing devices with similar specs).
The question here probably isn't whether the data is being abused; and raising that question is IMO _pandering_, not surprising for a liberal, who after all must have idiots for constituents, or they wouldn't have been elected. (I mean, really, Heinlein summarized economics concisely with TANSTAAFL, and there _is_ something usually ignored called the Tenth Amendment, which basically says the states can be socialist if they want, but the federal government can't.)
The _real_ question is what safeguards are in effect to minimize the potential for abuse. Ok, we theoretically need a warrant for this sort of thing (although I wouldn't put it past individual states to play fast and loose). But what about foreign governments, already inclined towards police state behavior? What about people _knowing_ what risk they're putting themselves at in case of some civil suit?
IMO, Apple needs to provide and prominently _document_ a way to clear the saved data, and/or document the degree to which disabling location services prevents its retention (let alone anonymous reporting) in the first place. (For jailbreakers, I gather there's already a Cydia app that once installed, will automatically delete data older than a few minutes.) People need to understand that encrypted backups would make the information sync'd back to their Mac or PC safer. And so on.
Generating hysteria is perhaps a useful political tool, for those inclined to address themselves to the least common denominator. But asking the more specific questions which would lead to real answers takes more than PR, it takes a functional brain, or at least the sense to hire a staffer who has one or can consult one.
apologists unite!
