Microsoft is reporting that they have discovered unintended behavior with its Windows Phone location services. Following a Federal Lawsuit that claims Microsoft was doing such, Microsoft said they'd look into the claims and sure enough, they found a bug.
In a statement released earlier on Wednesday, Microsoft revealed,
"We have identified an unintended behavior in the Windows Phone 7 software that results in information about nearby Wi-Fi access points and cell towers being periodically sent to Microsoft when using the Camera application, and, for phones that are configured for US-English, when using the phone’s voice command features (such as “Find Pizza”). For the Camera, the software bug results in the behavior even where you have disabled geo-tagging photos in the Camera application."
Microsoft did state that the recent Mango Update eliminates the unintended behavior (lawyer talk for "we didn't know it was there") by the camera application and voice command feature. However, the bugs are still present when using the "Me" feature in the Peoples Hub. Wifi access points and cell tower information is sent to the Windows Phone location service each time a user accesses "Me".
Microsoft is already working on an update to fix the "Me" bug after which, information about nearby Wifi access points and cell towers will be sent only if you agree to allow the "check in" feature of "Me". There was no time frame on this update but I suspect it will be sooner than later.
In the meantime, Microsoft is reminding Windows Phone customers that you can prevent access to location information by applications and the collection of location information by going to Settings>Location and turning this feature off.
For more intelligent discussion on the matter, take a look at Rafael Rivera's take on it here: "Dissecting Case 01438 Exhibit B, Part 4"