I realise you might be using Facebook as an example in a theoretical sense (i.e., that Apple believes protecting your location is more important than protecting your contact database), but in case you weren't, Facebook's "find friends" feature does give you an explanation of what is going to happen, asks you to confirm.

Here's the explanation:

"If you enable this feature, all contacts from your device (name, email address, phone number) will be sent to Facebook and be subject to Facebook's Privacy Policy, and your friends' profile photos and other info from Facebook will be added to your iPhone address book. Please make sure your friends are comfortable with any use you make of their information."

Facebook is trying to push the responsibility for the privacy of your friends to you with this, and by doing so they are violating EU privacy laws.

See: http://en.wikipedia.org/wiki/Data_Protection_Directive

This is one of the few areas where the EU is (still...) ahead of the rest of the world. Facebook should not be able to collect data on your friends even at your request unless your friends explicitly consent to this.

Clearly your friends have no business passing on your data and Facebook has no business collecting it. "Make sure your friends are comfortable" is no excuse for facebook to go ahead and break the law.

Your neighbours to the north also have laws like this that are on par with the DPD. The EU treats PIPEDA as essentially an implementation of the DPD so that DPD compliant orgs can share data with Canadian businesses.

  > Your neighbours to the north

Confused me a bit, b/c I don't think that jacquesm is from the US. I was thinking 'neighbors to the north' meant Scandinavia or Iceland.

Yes, Facebook was just an arbitrary company/app to use as an example. Nice that they exercise some restraint, though.