OMG! IS YOUR PALM PRE SPYING ON YOU?

Users of the Palm Pre were shocked by reports that the popular little handset periodically phones home with details on where you are, and what you're doing. Is Palm up to no good, and is it the only phone manufacturer that's gathering your info?
The whole brouhaha exploded Wednesday, after a Pre user posted a report on how his handset was sending daily reports back to Palm complete with GPS coordinates, which apps you're using, which apps you have installed, and details on whether any apps have crashed recently.

Howls of protest (naturally) ensued, with many users complaining that their Pres were spying on them without their knowledge—and what exactly is Palm doing with all this information, anyway? Selling it to advertisers? Handing it over to the government, or the cops? What gives?

Well, as PreCentral.net points out, the Pre EULA (End User License Agreement) does, in fact, warn that Palm "may collect, store, access, disclose, transmit, process and otherwise use your location data (including real time geographic information) in accordance with Palm's privacy policy." It's all in fine print, of course, but if you've signed a contract with Sprint for the Pre, you've agreed to the Pre EULA, for better or worse.

Palm also sent a statement to PhoneScoop on Wednesday, saying that it "takes privacy seriously" and pledging that the "goal" of data collection is to deliver "a great user experience" (on Google Maps, for example, or by identifying buggy apps remotely) rather than to spy for no good reason.

OK, but does Palm go further than other smartphone manufactures—such as Apple and RIM—when it comes to reporting back on your current whereabouts? Not really, according to some wireless observers.

BusinessWeek's Olga Kharif notes that Apple—like Palm, and other phone makers—knows which apps you have installed, and it even has a "kill switch" that lets the gearheads in Cupertino reach out and remotely zap applications off your iPhone.

Indeed, as Kharif writes, "Palm is likely not doing anything that its smartphone rivals don't."

Security expert Tony Bradley writes in PC World that the Pre's privacy "violation" is "not unique to the Pre and is also standard operating procedure for many technologies today." Example? Take the gas pump, Bradley notes, which records the time, date, and location of your (credit card) transaction—information that's easily accessible by just about anyone (including, of course, law enforcement officials) who wants to know.

And what is all this information that Palm and others are collecting used for, anyway? "Handset makers and carriers argue that they need this data to improve their products and services," Kharif writes for BusinessWeek. "They've got a point: If they know a particular app crashes all the time, they can take steps to fix it."

In its statement to PreCentral, a Palm spokesperson adds that the company will "collect and transmit users' email addresses, email content, contact list, etc. to provide WebOS services"—WebOS being the Pre's operating system—"such as back-up and restore for the purpose of backing up that data and helping users restore the data if needed … if users someday make purchases on their device through the Apps Catalog, then we would also collect payment information to process the transaction."

The key to all this is, of course, disclosure—and sensible disclosure, not just a clause buried in the tiny print of an end-user agreement. The Pre, for example, will warn you the first time you open the Locations Services app that it may collect "anonymous" information about your whereabouts and gives you the option to "opt out"—but I'm sure plenty of users (myself included) simply end up clicking "yes" without thinking about it.

If you're really paranoid, I'd suggesting turning your phone's location services off; in the case of the Pre, fire up the Location Services app for privacy settings (switch "Background Data Collection" to "Off," according to BetaNews), while iPhone users can turn locations services off under Settings, General.

That said, the more we embrace convenient features like GPS and location-based services such as Google Latitude, Loopt, Buddy Beacon, the more we have to accept that we're compromising our privacy, for better or worse.

As PC World's Bradley concludes, "the only way to achieve complete privacy is to shun technology completely and live a Luddite existence in a cabin in the Rockies somewhere."

So, what do you think: Are smartphone makers like Palm going too far with their data collection policies? Do you trust them with your information? Or is the Palm privacy flap a tempest in a teapot?