On the desktop at least, you can work around most of this tracking if you use a despotify based client like Clementine, which certainly isn't passing this information along.
OTOH, they have to put in their T&C the things that they do. Their newest feature is running music, you start running and it plays appropriate beat music for your speed, which obviously requires tracking how fast you are going, which requires logging where you were and how long ago. If you aren't using the running feature, I don't think spotify will be doing that extra work, but because they might (if you ask them to do it!), it has to be in the T&C.