A growing group of state, federal and foreign government officials is asking Apple Inc. to explain why its iPhone and iPad mobile devices track users’ whereabouts.

Illinois Atty. Gen. Lisa Madigan on Monday requested meetings with both Apple and Google Inc, which also records users’ location data through its Android smartphones. Last week, two researchers drew attention to a data file embedded on Apple devices that apparently keeps tabs on years' worth of user location data.

“I want to know whether consumers have been informed of what is being tracked and stored by Apple and Google and whether those tracking and storage features can be disabled,” Madigan said in a statement.

Madigan’s letter followed requests to Apple last week by Sen. Al Franken (D-Minn.) and Rep. Edward J. Markey (D-Mass.). Privacy regulators in France, Italy and South Korea are also looking into the matter, according to news reports.

Apple has not responded to requests for comment on the tracking, which received wide attention last week.

Apple told lawmakers last year that its mobile devices send batches of user location data back to the company twice a day. The data do “not reveal personal information about any customer,” Apple said at the time.

Google too has acknowledged it collects location data from users’ mobile devices in order to be able to provide and improve applications like Google Maps, which helps users navigate city streets.

The company said in a statement that users are notified before their location data are collected and are offered the chance to turn off the function. Like Apple, Google has said that the location data it collects are stored anonymously.

Apple has also said that users can stop tracking features by turning off all location-based services on their phones, but a report in the Wall Street Journal last weekend contended that the data were collected even after those services were disabled.

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-- David Sarno

Image: A user who traveled in Austria and Germany posted a graphical representation of location data from his iPhone. Credit: alfaltendrof / Flickr

Following widespread attention drawn by a file embedded on Apple iPhones and iPads that keeps a detailed log of the devices' location, Congressman Ed Markey (D-Mass.) has sent Apple Chief Executive Steve Jobs a letter asking him to explain the purpose of the file.

"I am concerned about this report and the consequences of this feature for individuals' privacy," Markey wrote to Jobs in a letter released Thursday (see below).  Markey then listed a number of questions about the location file, Apple's uses for it, whether the company intentionally created it to track users and whether it's used for commercial purposes.

Markey, who has written to Apple over location privacy concerns before, requested an answer to his questions by May 12.

From Rep. Markey: Apple Ios Letter 04.21.11

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-- David Sarno

Image: The locations of an iPhone user's travels around the greater Los Angeles area over a 6-month period. Credit: Los Angeles Times

Apple Inc. rode to another record quarter, largely on the strength of its workhorse iPhone, the popular smartphone that has helped the company become the most valuable technology firm in the world.

The company sold 18.65 million iPhones in its fiscal second quarter, the largest number it has sold since the device debuted in mid-2007. The reported quarter, ended March 26, was the first in which Apple offered the iPhone through Verizon, opening up the device to tens of millions of new customers. Before January, only AT&T customers were able to buy the iPhone.

"When the iPhone does well, it does a lot to boost the profitability of the company as a whole," said Yair Reiner, an analyst at Oppenheimer & Co. "The iPhone is Apple's most profitable product."

The results, released after the market closed Wednesday, immediately impressed Wall Street. In after-hours trading, Apple stock rose $8.70, or 2.54%, to $351.11. Apple doubled its profit over the same quarter last year, to $6 billion from a little over $3 billion, and realized a similar increase in revenue, rising to $24.67 billion from $13.50 billion a year ago.

"With quarterly revenue growth of 83% and profit growth of 95%, we’re firing on all cylinders,” said Apple Chief Executive Steve Jobs, now on medical leave, in a statement. “We will continue to innovate on all fronts throughout the remainder of the year."

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-- David Sarno

Photo:  iPhones from Verizon and AT&T held side by side.  Credit:  Paul Sakuma / Associated Press

Yahoo Inc. said it would begin keeping records of its users’ search engine queries for at least 18 months, abandoning an earlier policy under which it kept data for only three months.

The retention of search term histories, which can encompass personal topics such as medical conditions or financial issues, has long been a point of contention in debates over digital privacy.

Yahoo said Monday that the decision was made to keep pace with online competitors.

"Over the past several years it’s clear that the Internet has changed, our business has changed, and the competitive landscape has changed," Anne Toth, a policy executive at Yahoo, wrote in a blog post. "We have gone back to the drawing board to ensure that our policies will support the innovative products we want to deliver for our consumers."

It was also Toth who, in December 2008, said that keeping the data for only three months would set Yahoo apart from its competitors and build trust with the company’s users.

But since that announcement, Yahoo’s share of the search business has dwindled, dropping to 16% in March from 20% in late 2008, when it instituted its three-month retention policy, according to Web ratings firm ComScore Inc. 

Google Inc., which accounts for about 66% of U.S. searches, keeps logs of users’ searches for at least 18 months, after which it applies some changes to the files that make it more difficult to determine which users performed the original search. But the company does not specify in its privacy policy the exact manner by which it scrubs the records.  

Microsoft said that after 18 months, it removes information from search logs that could identify users, including IP addresses  — the unique code that each Internet-connected computer uses to send and receive data.

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-- David Sarno

Photo: Yahoo headquarters in Sunnyvale, Calif., in 2008.  Credit: Paul Sakuma / Associated Press.

E-book sales are piling up fast. 

In February, a couple of months after huge numbers of readers got electronic reading devices for the holidays, sales of e-books reached $90 million -- more than tripling the number from a year earlier, according to the Assn. of American Publishers.

Although that number was still smaller than sales for all paper formats combined, it outstripped any single print format -- hardcover, trade paperback or mass market paperback (think mystery novels and blocky airport fare).

Scorching e-book sales are generating another side effect, publishers said.

"Trade publishing houses cite e-books as generating fresh consumer interest in -- and new revenue streams for -- 'backlist' titles," the AAP said in a statement. Backlist titles are "books that have been in print for at least a year. Many publishers report that e-book readers who enjoy a newly released book will frequently buy an author’s full backlist."

The AAP's data comes from 84 publishing houses, including 16 that sell e-books.

Last summer, online retailer Amazon.com Inc. said sales of e-books for its Kindle reader had far eclipsed hardcover book sales, noting at the time that it had been selling e-books for only a little more over two years and had been selling paper books since 1995.

Apple's iPad has also caught on quickly as a reading device, selling more than 100 million e-books since it was introduced about a year ago.

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-- David Sarno

Image: Amazon's Kindle device. Credit: kodomut via Flickr

Flipboard, the company behind the buzzy iPad magazine app, has once again scored a publicity bonanza.  In one day, the company announced a partnership with Oprah Winfrey's media network and an infusion of $50 million.

The company's previous PR trifecta happened in December when it was awarded Apple's "App of the Year" honor, the same week it released its first major update and co-founder Mike McCue joined Twitter's board of directors.

The new venture funding round -- Flipboard's second -- puts the value of the company at $200 million.  The round was led by Insight Venture Partners and joined by existing investors Kleiner Perkins Caufield & Byers and Index Ventures.  Comcast Ventures also came on board.

Flipboard said it would use the new funding to expand to more devices (currently it's only on the iPad), to develop its advertising strategy, and to expand its workforce to 50 or 60 employees by the end of the year from 32.

Flipboard spokeswoman Marci McCue said that while there are no specific plans for the company to move to the Android platform as of now, the application will probably move to other major systems later in the year.

Another major element of Flipboard's expansion plans has to do with attracting publishing partners to the app.  Partners like Oprah.

The partnership will mean new Flipboard users will see recommended sections on the app's front page -- Twitter, Facebook and now Oprah.  While the first two allow users to customize the content that fills in their particular version of Flipboard's "social magazine" -- Oprah's page will essentially be a magazine filled with stories, videos and photos from Oprah.com and the other provinces of Winfrey's media empire.

Next up for Flipboard is an iPhone version, due out this summer.

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-- David Sarno
twitter.com/dsarno

Google Inc. has maintained that its suite of office products aimed at government clients has been certified under a law that mandates strict information security rules for federal agencies.  But the Justice Department says that's not the case.

Google has maintained that Google Apps for Government, the company's government-focused email and office software product, is certified under the Federal Information Security Management Act, known as FISMA. FISMA requirements derive from a 2002 law designed to safeguard and manage digital information used by federal government agencies.  

Google has been trying to win more clients in the lucrative government email market, long dominated by rival Microsoft Corp. Building a special, extra-secure government version of its popular Google Apps software has been key to those efforts, and in various promotional and support documents, Google says its government offering is certified and accredited under FISMA.

But in documents unsealed last week as part of a lawsuit that Google filed in October against the Department of the Interior, the Justice Department disagrees.

In its recent brief, Justice Department lawyers wrote that "notwithstanding Google's representations to the public at large, its counsel, the [Government Accountability Office], and this Court, it appears that Google's Google Apps for Government does not have FISMA certification."

The brief cites a December email in which a security officer at the U.S. General Services Administration, which issues the certifications, tells another official that "google for government does not have a c and a yet," referring to a FISMA certification and accreditation, but that the company was seeking the credential.

The General Services Administration did not immediately respond to a request for comment.

Google has responded that the consumer and business version of its office software -- Google Apps -- did receive a FISMA certification last July from the GSA.

"Google Apps for Government is the same system with enhanced security controls that go beyond FISMA requirements," said David Mihalchik, who oversees Google's government software intiatives, in a statement. He noted that Google "did not mislead the court or our customers."

In January, a judge granted Google a preliminary injunction in its case against the Interior department, in which Google alleged that in the agency's process to procure a new email system for its 88,000 employees, it had illegally skewed the bidding process to favor Microsoft products.

Microsoft jumped on the unsealed documents on Monday morning, with its Deputy General Council David Howard noting in a blog post the apparent contrast between Google's claims and those by the Justice Department.

"When it comes to security," Howard wrote, "the facts matter."

The city of Los Angeles has partially adopted Google's government email system for some of its 30,000 employees. 

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-- David Sarno

AT&T Inc. announced Sunday it would buy T-Mobile USA in a cash and stock deal worth $39 billion, a move that would combine two of the largest U.S. wireless providers and build a telecommunications behemoth that would tower over Verizon Wireless, the other leading cellular network.

The merger would combine AT&T's 95.5 million wireless subscribers with another 33.7 million from T-Mobile, a division of the German communications conglomerate Deutsche Telekom.  With close to 130 million subscribers on a wireless system that would combine the vast national networks of both companies, the resulting union would far outstrip Verizon and its 94.1 million customers.

AT&T suggested that increased competition resulting from the deal could benefit consumers but did not explicitly say the plan would mean lower prices for its customers.

“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” AT&T Chief Executive Randall Stephenson said in a statement.

AT&T highlighted the efficiency savings it would garner from a merger, given that both companies use similar cellular technology -- as opposed to a different model used by Verizon -- and both are planning to take similar steps toward the next generation of faster 4G networks.

Part of AT&T's gambit has to do with the steep rise in the use of data services by consumers with sophisticated smart phones.  With many more users adopting video-ready, Internet-connected phones such as Apple's iPhone and the many Google-powered Android devices, demand for wireless bandwidth among consumers is quickly increasing, and the industry has been struggling to stay ahead of that demand.

AT&T said data traffic on its wireless network had grown 8,000% over the last four years.

"Because AT&T has led the U.S. in smart phones, tablets and e-readers -- and as a result, mobile broadband -- it requires additional spectrum before new spectrum will become available."

Critics quickly warned about the perils of conglomeration, saying federal regulators should scrutinize the deal carefully lest it actually lead to less market flexibility.

"Don’t believe the hype: There is nothing about having less competition that will benefit wireless consumers," said S. Derek Turner, research director at media industry watchdog Free Press, in a statement.

“A market this concentrated -- where the top four companies already control 90% of the business, and two of them want to merge -- means nothing but higher prices and fewer choices, as the newly engorged AT&T and Verizon exert even more control over the wireless Internet."

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-- David Sarno

Photo: Deutsche Telekom Chairman and CEO Rene Obermann, left, and AT&T Chairman and CEO Randall Stephenson pose for photos in New York on March 21, 2011. AT&T Inc. said Sunday it will buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion that would make it the largest cellphone company in the U.S. Credit: Mark Dye/Newscast/AP Photo

Apple Inc. on Wednesday saw its worst share price decline since June, shedding 4.5% of its value as a Wall Street analyst issued a rare downgrade and the broader market slumped alongside.

The world's largest technology company by market value has lost about 6.6% of that value -- or about $19 billion -- in the last two days. That's an about face for the fast-growing stock, which had gained about 10% since the beginning of the year, and which is still up more than 56% since March 2010. 

The drop coincided with a downgrade by Alex Gauna of JMP Securities, who lowered his rating on Apple from "market outperform" to simply "market perform," citing weaker sales by one of Apple's main manufacturers, Taiwan-based Hon Hai Precision Industry Co. Hon Hai assembles many Apple devices at its Foxconn plants in China.

Gauna noted that Hon Hai had seen slowing year-over-year sales growth in recent months, dropping from 84% in December to 37% in January and 26% in February. His analysis also noted the potential for disruptions to Apple's supply chain by the ongoing earthquake disaster in Japan.

Japan is among the world's largest manufacturers of flash memory chips that fit into smart phones and tablets, including Apple's recently launched iPad 2, which debuted Friday and may have sold 500,000 units in its first weekend, according to some estimates.

Apple’s shares sank $15.42, or 4.5%, to $330.01 on Wednesday, more than double the 2% decline of the average blue-chip stock in the Standard & Poor’s 500 index.

The sell-off left Apple at its lowest price since Jan. 21 and down 9.1% from its record closing high of $363.13 on Feb. 16.

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-- David Sarno and Tom Petruno

Photo: mollyali / Flickr

In March 2006, Jack Dorsey began writing the code for a simple program that would let his office mates send each other little messages. But more than e-mail or instant message, the idea was to let people send everyone in the office short 140-character status updates, either from their computers or via text message. Originally the project was called "Stat.us."

But before long, it became Twitter.

Dorsey reminded the world about the inception of Twitter in a tweet Sunday: "5 years ago today we started programming Twitter ("twttr" for short). 8 days later the first tweet was sent: http://t.co/Vi5ii5A #twttr."

Next Monday will be the fifth anniversary of that very first tweet:

Fairly prosaic, of course, but that was long before Jack or any of his "co-workers" would know that Twitter would go from a neat interoffice messaging tool to a worldwide information exchange medium -- used by everyone from the president of the United States, to Bill Gates, to Iranian and Egyptian dissidents, and back to Charlie Sheen.

Twitter started as a sort of hobby project inside a separate company -- Odeo -- that built ways to share audio and video over the Web. The company was founded by Noah Glass and Twitter co-founder Evan Williams -- and they gave Dorsey the free time to follow an idea he'd been brewing for years. Dorsey explained much of the origins of the Twitter idea in a set of interviews he did with the L.A. Times in 2009. In them, he talks about one of the site's founding sketches that he drew in 2001.

Dorsey said Sunday that he would be sharing early notes and drawings from the service's founding this week. Among the first tidbits he sent around was an instant-message exchange he had with Twitter co-founder Biz Stone, telling Stone that work on Twitter (then called "twttr") was starting:

me: Biz! How goes? We're starting work on the twttr implementation today.

Biz: really?! NICE

Dorsey reminded his Twitter followers that the company's name was based on the definition of "twitter" in the Oxford English dictionary: "a short inconsequential burst of information, chirps from birds."

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-- David Sarno 

twitter.com/dsarno