During an appearance on The Talk Show partially transcribed by MacStories, John Gruber said that the server-side of iCloud will "make a decision and it will decide which one is the best," when faced with a conflict between files.
"That is what [Apple CEO] Steve Jobs means when he says The Truth is in the Cloud. iTunes will decide which one is right and thats it. iCloud will push that right one to any device that has this account that has a different version," he continued.
The decision would reportedly happen behind the scenes without needing to prompt the user. Currently, file differences detected by the company's MobileMe service prompt a dialog box asking users to manually resolve the conflict.
However, if the automatically selected version is not the right one, iCloud will have the alternate versions stored, Gruber added. "There will be some sort of interface like go and look at your contacts. There will be some sort of way to say show me previous versions and let me pick the one that is right. You pick it and push it back up into the cloud and tell it thats the truth and Apple will push it out," he said.
The feature appears to be similar to Versions in the Mac OS X 10.7 Lion betas. Versions records changes to a document along with time stamps, allowing users to go back to recover older revisions.
When asked whether he knows about iCloud's versioning system or it's "just a theory," Gruber responded, "I know this," and went on to speculate that iBooks is an example of the feature. iBooks is able to automatically resolve differences in a user's "read state" or "current page state" between devices without presenting a dialog.
Apple took the wraps off its long-awaited iCloud service last week at the Worldwide Developers Conference in San Francisco. The free service is scheduled to launch this fall alongside iOS 5.