They actually track which stores you visit to monetize ads. If you opt out then a lot of things including Google Now stop working.
They even do the same thing on iOS if you use Gmail, Chrome or Google Now apps.
It is easiest for Google to conduct this passive location tracking on Android users, since Google has embedded location tracking into the software. Once Android users opt in to location services, Google starts collecting their location data as continuously as technologically possible. (Its ability to do so is dependent on cell tower or Wi-Fi signal strength.)
Android is currently the leading mobile OS in the U.S. with a 45.9 percent market share in 2013, according to eMarketer. A little more than a fifth (20.3 percent) of the U.S. population uses Android smartphones.
But Google can also constantly track the location of iPhone users by way of Google apps for iOS, Apple’s mobile operating system. IOS is just behind Android in U.S. market share with 38.3 percent of users, per eMarketer. Nearly 17 percent of the American populace uses an iOS smartphone.
When an iPhone user stops using an app, it continues running “in the background.” The user might not realize it, but the app continues working, much in the same way tabs function on a Web browser.
Google’s namesake iOS app — commonly referred to as Google mobile search — continues collecting a user’s location information when it runs in the background. This information is then used to determine if that user visited a store and whether that store visit can be attributed to a search conducted in the app. Store visits can also be tracked via Google’s other iOS apps that use location services. If iOS users open their Chrome, Gmail or Google Maps app in a store, their location can be deemed a store visit.
And they recently stopped snooping on the free Google Apps and email for Schools and even businesses after doing it for a long time to build ad profiles after they didn't dare telling the same lies in federal court that they were telling to the public about snooping on students to show ads.
But hey, it's Google so they get a free pass here while if MS did anything even close to that people would be shouting from rooftops.