Apple ( AAPL) Apple has always had a stellar reputation among a fan base that thinks it can do no wrong. Its Teflon coating may be starting to wear off. OK, consumers seemed pretty willing to forgive and forget when a verifiable antenna problem on the iPhone 4 was cavalierly dismissed by CEO Steve Jobs. "You're holding it wrong," he told users. The latest brouhaha probably won't be so easy to brush off with a terse email "sent from my iPad." By now you have probably heard that iPhones have a sneaky little file that periodically logs and time-stamps your location. While true a wide range of apps function via location-based services, they typically require the user to agree to share information. Apple's file -- "protected but not encrypted," it says -- is transmitted to the company and backed up in iTunes whenever you back up your iPhone. Amid Congressional scrutiny, consumer paranoia and conspiracy theorists taking a break from looking for Photoshop layers in President Barack Obama's birth certificate, Apple had some explaining to do. "Apple is not tracking the location of your iPhone," it offered in an official statement. "Apple has never done so and has no plans to ever do so." The reason everyone is so worked up? The answer is a slightly less snarky variation of "you're holding it wrong" that could be phrased as: These pesky users just don't get it. "Providing mobile users with fast and accurate location information while preserving their security and privacy has raised some very complex technical issues which are hard to communicate in a soundbite," Apple wrote. "Users are confused, partly because the creators of this new technology (including Apple) have not provided enough education about these issues to date." Why they are doing this? Apple says it is mainly to help map out Wi-Fi hotspots and cell towers to "help your iPhone rapidly and accurately calculate its location when requested." Apple does say the data is anonymous, but notes, "Our iAds advertising system can use location as a factor in targeting ads." Third-party apps do need your permission to triangulate where you are, and an upcoming OS upgrade will stop backing up this cache and delete it when Location Services is turned off. Fair enough, perhaps. And yeah, sure, users may have overreacted or had false expectations of online anonymity. But still, should Apple really be acting shocked and put upon just because it has the ability to track of your daily life by time and location? To many, it's a scary proposition, a dangerous precedent and an i-Invasion of i-Privacy.