Earlier yesterday, PC Magazine managed to get Microsoft on record about the whole "location-data storage" controversy (see related coverage on the iPhone here and on Android here via our sister sites). Strictly speaking, in regards to storing location data on the phone, Microsoft is in the clear, at least comparatively:
Microsoft told PCMag unequivocally that phones running Windows Phone 7 do not store location history. Like most other phones, the platform offers plenty of location-based apps, and those apps require user consent before they begin tracking. Windows Phones also offer the common feature of a "global switch" that lets the user disable all location services, and Microsoft says its "Find My Phone" service keeps only the phone's most recent location.
But it's a little more complicated than that--strictly speaking, Windows Phone doesn't store it locally on the phone where it can be "hacked" by 3rd parties and it sure doesn't sync it back to Zune either where it can also be compromised. But Microsoft does collect the data themselves and store it--after all, how else would Microsoft's location based system i.e. 'Orion' get such speed location data? It's no different than aGPS vs GPS: the more data you have available at the moment, the faster the acquisition.
According to Cnet, this is the case with Microsoft and their system:
Microsoft says its operating system transmits the MAC address of the Wi-Fi access point (but not the name), signal strength, a randomly generated unique device ID retained for an unspecified limited period of time, and, if GPS is turned on, the precise location and direction and speed of travel. That happens when the "application or user makes a request for location information," the company says.
Once again--this is not in the same league as the iPhone issue (which may be a bug, not a nefarious plan by Apple) but that data of course could be used by Law Enforcement Agencies (LEA), often without a warrant as determined by the courts (GPS doesn't count as "search and seizure" and if you're on Sprint, that could be quite scary). We also don't know how much and for how long data is collected--actually there are tons of questions we don't have answers for yet. The obvious thing to do if you do not want to be tracked is to use the global switch and just turn it all off--of course that would still leave your cell signal available i.e. AFLT-Advanced Forward Link Triangulation to find your whereabouts. So basically just unplug if you don't want to be tracked, 'kay?
And we look forward to Microsoft answering CNet's questions on the matters. We'll check back.