Google uses cell towers to locate users

Previously mobile users with only GPS enables phones could track where they were and what’s in their neighbourhood. But now with “My Location” service in Google Maps, helps people who lack the positioning technology in their phones. This service currently in beta helps users to locate themselves based on their location to nearby cell towers. Even though the result isn’t as accurate as a GPS it works well for users who do not have GPS in their handsets. It works indoors better than GPS, gives out results pretty fast and doesn’t drain out the battery as quickly.
Read the full article at and also GPS Receivers for more information on how GPS recievers work