Microsoft today said it’s investigating allegations that Windows Phone 7’s camera collects data about the locations of users against their wishes.

It is Microsoft’s first public response to a lawsuit filed against the company last week in federal court in Seattle. The company denies the broader implications of the suit, saying it isn’t storing location data in a way that can be associated with specific devices or users. However, the company also leaves unanswered the allegation that the built-in Windows Phone camera app is collecting and transmitting location data from the devices of users who tell it not to.

Microsoft’s statement was first reported by the International Business Times and separately sent to GeekWire by the company. It reads, in part:

“Because we do not store unique identifiers with any data transmitted to our location service database by the Windows Phone camera or any other application, the data captured and stored on our location database cannot be correlated to a specific device or user. Any transmission of location data by the Windows Phone camera would not enable Microsoft to identify an individual or ‘track’ his or her movements.”

According to allegations in the proposed class-action lawsuit, a security researcher found that “even after a Windows Phone user expressly denies Microsoft access to location information through the camera application, the device transmits the following data to Microsoft’s servers when the camera is activated: the approximate latitude and longitude coordinates of the user’s device, a unique identifier for the device, current date and time, and the locations of the closest cellular tower and WiFi network.”

The privacy option displayed to Windows Phone camera users, as republished in the lawsuit.

Looking again at Microsoft’s statement, it says, “we do not store unique identifiers with any data transmitted to our location service database by the Windows Phone camera or any other application.”

However, the statement today doesn’t specifically address the allegation that Windows Phone’s camera app collects and transmits location data after users tell the camera app not to do that.

In a May 9 letter to Congress (PDF, 9 pages), following a controversy over iPhone location tracking, Microsoft said …

“Regardless of the types of location data that can be collected, the Windows Phone 7 operating system will collect location data only if (1) the phone’s location service capability is enabled, (2) the user has allowed an application to access and use location data; and (3) the user-authorized application actually requests location data. If these three elements are satisfied, the approximate location of the device is provided to the application, so the application can provide its location aware features.”

Also as part of that letter, the company said this on the subject of unique device identifiers.

“Microsoft’s collection of location data is focused squarely on finding landmarks that help determine a phone’s location more quickly and effectively. In our case, the landmarks we use are nearby WiFi access points and cell towers. The information we collect and store helps us determine where those landmarks are, not where device users are located. In fact, we’ve recently taken specific steps to eliminate the use and storage of unique device identifiers by our location service when collecting information about these landmarks. Without a unique identifier, or some other significant change to our operating system or practices, we cannot track an individual device.”

Here’s the company’s full statement today.

“Microsoft is investigating the claims raised in the complaint. We take consumer privacy issues very seriously. Our objective was — and remains — to provide consumers with control over whether and how data used to determine the location of their devices are used, and we designed the Windows Phone operating system with this in mind.”

Because we do not store unique identifiers with any data transmitted to our location service database by the Windows Phone camera or any other application, the data captured and stored on our location database cannot be correlated to a specific device or user. Any transmission of location data by the Windows Phone camera would not enable Microsoft to identify an individual or “track” his or her movements.”

We’ve asked a Microsoft representative if the company wants to address the specific question of whether the camera app uses location data against the wishes of users who opt out of that capability. More updates as we have them.

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