Congress went over to the House that Gates built and inquired about this whole 'Cell phone tracking thing’ that’s going around. Microsoft responded that, yes, they do indeed know the locations of all 4 of the people using Windows Phone 7 handsets. Furthermore, Microsoft states that this information is no longer important and plan to remove it in a planned update:
"Given the declining utility of device identifiers, Microsoft recently discontinued its storage and use of device identifiers," Lees states on page 5 of the letter. "Further, as part of its next scheduled update to existing Windows Phone 7 devices, updated devices will no longer send device identifiers to the location service and new phones arriving this fall will not send device identifiers to the location service."
Not much use, but they put it into their brand new OS anyway. Microsoft previously denied that Windows Phone 7 stored its user’s location in an article for PC Magazine.