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I wonder if disabling "Location services" in Android fully disables it. There is a definite conflict of interest with Google, since they both write the operating system and rely on location data.

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To me, the concerning bit of software is not the operating system (which is open source and fairly transparent) but rather Google Play Services, which is a proprietary background service that has nearly complete access to your device. Unfortunately so many applications make use of it that it's hard to ditch. There are open source efforts to replace it [0] but AFAIK nothing ready for consumers.

[0]: http://forum.xda-developers.com/android/apps-games/app-micro...

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