By selecting Standalone GPS Services, you are enabling access to all location information by any third party through the web, software or any peripheral components you install, download, add or attach to the device, or by any other means. Enabling this functionality could pose certain risks to users of this device.
The vagueness of the "certain risks" is what really makes me pause, so not knowing what I might be risking I keep it off for the most part. I turn it on when I want to look for something around me using Google Maps or if I want to check in at a location on Facebook Places.
Without the GPS, my phone still has a vague idea about where I am based on the cell tower I'm connected to -- they guess direction and location by signal strength and bouncing off more than one cell tower to triangulate with 1000 meters, sometimes less, sometimes more.
Except I noticed something odd at home the other day. GPS was off, but Google Maps knew EXACTLY where I was. By "exactly" I mean it showed the little arrow placed squarely on our house, and the arrow was even facing the same direction I was.
So, if they aren't using GPS, what are they using? Skyhooks... Well, actually a company called Skyhook Wireless which has built a database of wireless access points by driving around with a wifi radio receiver and recording the unique serial number (or MAC address) that every wifi access point broadcasts. When they get a MAC address, it goes in the database along with the GPS location they recorded for that spot.
I was surprised because I knew Google had stopped collecting Wifi data because of complaints about privacy, (see Google's May 14 blog, WiFi data collection: An update). Not only were they getting MAC addresses, but because so many people don't bother setting a password on their Wifi access points they were getting actual data people were surfing -- you know, like Youtube videos of a kitten playing with yarn or BDSM porn.
Seems no one complained about Skyhook's data collection. Maybe because they weren't taking a picture of your house at the same time they took a picture of your Wifi data signature. That big camera on the Street View car makes people jittery -- although unmarked vans with radio antennas make me more nervous.
This is another example of how you THINK you have privacy, but you don't. I turn off my GPS (because Android warns me that all my apps can use it if it's on), but the "coarse location" is always on -- triangulating from cell towers is one thing, but even if I turn off my GPS and my cell signal, they know exactly where I am because I'm using Wifi. Even if Google warned me about that, it would make my phone useless to turn EVERYTHING off...
Oh, and they know which way I have my phone pointed because there's a compass in it... So that's not so creepy, but I can't turn it off.
In other words, if you're connected to the Internet, you're in the Matrix...