Apple updates privacy policy to collect iPhone location data

Apple (NASDAQ:AAPL) is revising its consumer privacy policy to authorize the collection and sharing of "precise location data" from devices like the iPhone and iPad. With Apple launching its new iPhone 4 this week and with its iAd mobile advertising network poised to go live on July 1, the computing giant quietly updated its privacy policy to read "To provide location-based services on Apple products, Apple and our partners and licensees may collect, use, and share precise location data, including the real-time geographic location of your Apple computer or device. This location data is collected anonymously in a form that does not personally identify you and is used by Apple and our partners and licensees to provide and improve location-based products and services. For example, we may share geographic location with application providers when you opt in to their location services. Some location-based services offered by Apple, such as the MobileMe 'Find My iPhone' feature, require your personal information for the feature to work."

The privacy policy change is presumably intended to enable Apple and its advertiser partners to more effectively target mobile ads and offers to consumers within a certain distance of a particular retailer, restaurant or similar site. The Los Angeles Times reports Apple has added a Location Services page under Settings-->General that allows users to prevent apps from using location information, but adds there is no indication that the settings prevent Apple itself from gathering and storing location data from its devices. Apple did not return a request for comment.

Apple's iAd tactics have already engaged the attention of regulators: The Federal Trade Commission reportedly will lead an investigation to determine whether the fledgling mobile advertising network unfairly restricts rivals like Google from extending their own mobile marketing efforts across the iPhone platform. Citing sources familiar with the matter, Bloomberg reports that discussions between the FTC and the U.S. Department of Justice ultimately determined that the former is the agency best equipped to spearhead the probe. The catalyst behind the FTC's investigation is Apple's recent decision to rewrite its iPhone Developer Program License Agreement to effectively block third-party analytics firms from collecting iPhone application user or device data to improve ad targeting. Section 3.3.9 of Apple's developer agreement now reads "You and Your Applications may not collect, use, or disclose to any third party, user or device data without prior user consent," adding that while developers can share data for advertising purposes, information may only be provided "to an independent advertising service provider whose primary business is serving mobile ads."

The developer license update is widely perceived as an attempt to stymie mobile advertising network AdMob, acquired by Apple's archrival Google for $750 million following an FTC antitrust investigation into the deal. "This change threatens to decrease--or even eliminate--revenue that helps to support tens of thousands of developers," wrote AdMob founder Omar Hamoui on the firm's blog. "The terms hurt both large and small developers by severely limiting their choice of how best to make money.  And because advertising funds a huge number of free and low cost apps, these terms are bad for consumers as well."

According to Apple CEO Steve Jobs, iAd pre-launch sales are already at $60 million--developers will earn 60 percent of all iAd revenues, translating to earnings of $36 million. Brands including Nissan, Citi, Unilever, AT&T, Sears, Target, JC Penney and Best Buy have so far signed on.

For more on Apple's privacy policy update:
- read this Wall Street Journal article

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