"Apple and its partners and licensors may provide certain features or services through the Service that rely upon device-based location information, which use GPS (where available), along with crowd-sourced Wi-Fi hotspot and cell tower locations. To provide such features or services, where available, Apple and its partners and licensors must collect, use, transmit, process and maintain your location data, including the real-time geographic location of your device, and you hereby agree and consent to Apple's and its partners' and licensors' collection, use, transmission, processing and maintenance of such location data to provide such services. In addition, by enabling and/or using any location-based services or features within the Service (e.g. Find My iPhone, Find My Friends), you agree and consent to Apple and its partners and licensors transmitting, collecting, using, processing and maintaining information related to your iCloud account (“Account”), and any devices registered thereunder, for purposes of providing such location-based service or feature to you, and use of your location data and location search queries to provide and improve location-based and road traffic-based products and services. Such information may include, but is not limited to, your Apple ID, device ID and name, device type and real-time geographic location of your device at time of your request. You may withdraw this consent at any time by not using the location-based features and turning off the Find My iPhone, Find My Friends, or Location Services settings (as applicable) on your device and computer. When using third party services that use or provide location data as part of the Service, you are subject to and should review such third party's terms and privacy policy on use of location data by such third party services. Any location data provided by the Service is not intended to be relied upon in situations where precise location information is needed or where erroneous, inaccurate, time-delayed or incomplete location data may lead to death, personal injury, property or environmental damage. Apple shall use reasonable skill and due care in providing the Service, but neither Apple nor any of its content providers guarantees the availability, accuracy, completeness, reliability, or timeliness of location data or any other data displayed by the Service."

http://www.apple.com/legal/icloud/en/terms.html