Google's Global Privacy Counsel, Peter Fleischer in a blog post announced that they are "building an "opt-out service in Europe" that will allow an access point owner to opt out from Google's location services. Once opted out, our services will not use that access point to determine users' locations."
Per Fleischer's blog post:
[…]Google Maps for Mobile, helps people find themselves on a map and then locate places nearby.
Estimating the location of someone using a service can be done in several different ways. As GPS is not always available and locations derived from cell towers aren't very accurate, Google (like other Internet companies) uses publicly broadcast Wi-Fi data from wireless access points to improve our location-based services. By using signals from access points, smart phones are able to fix their general location quickly without using too much power.
These signals can make products much more useful - by enabling public transport authorities to show you when a bus is expected to arrive at your nearest bus stop, for example.
Even though the wireless access point signals we use in our location services don't identify people, we think we can go further in protecting people's privacy. At the request of several European data protection authorities, we are building an opt-out service that will allow an access point owner to opt out from Google's location services. Once opted out, our services will not use that access point to determine users' locations.