The past week has seen one of the most damaging revelations about the iPhone yet. It all started when a group of security experts published a report claiming that the iPhone and iPad 3G continuously store data regarding your whereabouts even without explicit permission. The data is saved on the device itself, so if someone steals your iPhone, they will be literally able to have full glimpse of your entire movement history.

Apple’s response (in typical cavalier style) was an upfront denial. Both the CEO and other sources claimed that Apple does not collect location information nor does it have a secret policy of tracking people for any reason. While, this the evidence is mounting, we only need to take a good look back at what happened last year regarding the infamous ‘deathgrip’ with the newly launched iPhone 4, which was a disaster from a public relations point of view. Apple’s behavior was more childlike than that of a major electronics firm. This case is far more serious because it directly involves the privacy of every iPhone user and if government authorities start taking legal action against Apple, it will have an unprecedented problem.

Already authorities in the US and the EU plan on launching formal investigations and private class action lawsuits have been filed. Apple, for its part, already seems to be backtracking from formal denial.