Trying to understand Facebook's mysterious, ever-changing algorithm has become tantamount to searching for the meaning of life among power users.

How does each newsfeed come to be? Who or what determines the posts you see, the ads you're served, and the people you're encouraged to connect with?

There are many theories, but it's hard to say for certain because only Facebook knows how Facebook really works — and it keeps the social network's recipe locked up tighter than the Colonel's (which is likewise protected as a "corporate trade secret" by KFC.)

As such, tech watchers were curious this week when rumours started swirling that a new crack had formed in Facebook's carefully guarded veneer, revealing something we hadn't previously known about the network's suggested friends or "people you may know" feature.

"While the magic sauce behind friend suggestions has always been a bit mysterious, it now includes some potentially unsettling information," reported Kashmir Hill for Fusion on Monday. "Thanks to tracking the location of users' smartphones, the social network may suggest you friend people you've shared a GPS data point with."

If true, this means that Facebook could suggest a "friend" to you based on where you've been and when, regardless of whether you've actually met them. 

It also means that a stranger could see your face in their list of recommended contacts – an idea that's creeping out privacy advocates and casual users alike.

But is it more than an idea? Is Facebook really using mobile location data to populate our friend request feeds? 

According to a statement released by the company on Monday, yes, but only in part. 

"We often suggest people you may know based on things you have in common, like mutual friends, places you've visited, or the city you live in," reads the statement, which Fusion published on Monday. "But location information by itself doesn't indicate that two people might be friends. That's why location is only one of the factors we use to suggest people you may know."

News that the social network had confirmed its use of GPS data in recommending potential friends spread quickly across the web on Monday, thrusting Facebook into the centre of a heated digital privacy debate (yet again.)

The criticism became so heated, apparently, that it prompted Facebook to contact Hill on Monday night after it had "dug into the matter" further to say that location data was not, in fact, used to suggest people users may know.

After all, as Fusion notes, sharing the identities of users with each other before getting affirmative consent may be a violation of Facebook's agreement with the Federal Trade Commission.

In a statement sent to CBC News on Tuesday, a Facebook spokesperson similarly denied the initial reports.

"We're not using location data, such as device location and location information you add to your profile, to suggest people you may know," the spokesperson said. "We may show you people based on mutual friends, work and education information, networks you are part of, contacts you've imported and other factors."

Facebook's fast flip-flop on this has some critics curious about why and what's actually true.

It's already known that Facebook uses smartphone location data for advertising purposes, and that it "tested" using location data for friend suggestions last year.

"We show you people based on mutual friends, work and education information, networks you're part of, contacts you've imported and many other factors." - Facebook Help

There are also many accounts of users being freaked out by Facebook's eerily accurate friend suggestions to be found posted online from both before and after Fusion's story was published.

"Last year I was dropping my daughter off at a friend's house. The friend's dad met me at the door and we chatted. It was the first time that we had ever talked about anything. Literally just met the guy," wrote a commenter on Slashdot in response to Monday's reports. "In our conversation, we mentioned an app that he just started using (and was in fact using when I pulled up). It's an app that I would never use since it was about golf and I don't play or care about golf."

"Before I pulled out of his driveway I checked Facebook," he continued. "I kid you not, an ad for that app was on my news feed. I'd never seen it before, ever. Somehow they correlated his installation of the app, with my account, and showed me something that there was a chance we discussed."

Here's how to change or turn off location services on a smartphone, if you're interested.