AFP: Apple has officially responded to the controversy about stored location data on the iPhone saying, "Apple is not tracking the location of your iPhone. Apple has never done so and has no plans to ever do so."
The company says that the file that stored users' location data was a database of nearby Wi-Fi hotspots and cell phone towers intended to "help your iPhone rapidly and accurately calculate its location when requested."
However, the company said that the fact that the iPhone stored so much data was a "bug." They plan to issue a patch that will limit the data collected to the past seven days and encrypt the file containing location data.
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