That it not how statistics work. Assume it is correct 90% of the time. There are 700 million iPhones worldwide. Assume 1% of them use the app, that is 7 million friends found, and 700k incorrect locations.
And only 1% of those users will have their phones stolen, and only 0.01% of those users will be suspected kidnapping victims. So only a handful of people would actually be actually be inconvenienced by such a policy.
The way this would work out in a proper world, is that the search would take place, they'd realize it was fruitless and that the location information provided was incorrect and then the phone manufacturer and the cell phone company would each cut a check for $1,000,000 to the person who was false accused. And this would happen each and every single time a person's civil rights were violated because some product developer did a shitty job. A 1% failure rate is pretty low quality.
You aren't owed a million dollars because your house was falsely searched. That's absurd. The police have a right to do searches if there is decent evidence or suspicion of a crime, and 99% is way more than enough for probable cause. A 1% failure rate is actually incredibly good and means it will be very very rare for innocent people to get searched at all.
