Behavioural ad platform Phorm loses support

Shares in controversial behavioural advertising platform Phorm were in freefall this week, after incumbent UK carrier BT moved to distance itself from the technology.

The company’s stock price had plummeted from a recent high of 475p on July 3, down to 267p mid-morning Tuesday.

Phorm analyses users’ web surfing habits to determine interests and deliver targeted advertising on certain websites. In April 2008, BT admitted that it had tested Phorm in 2006 and 2007 without informing users involved in the trial. After a public outcry, BT then carried out an invitation-based trial of the technology in October and December of 2008.

This week, BT revealed that it has put plans involving Phorm on hold, while it focuses on other operations.

As a result of complaints to the UK data protection watchdog the Information Commissioner’s Office (ICO) and the police, the European Commission expressed concern over structural problems in the way the UK has implemented EU rules ensuring the confidentiality of communications.

Under UK law it is an offence to unlawfully intercept communications, but the scope of this offence is limited to ‘intentional’ interception only and features a loophole allowing the interceptor ‘reasonable grounds for believing’ that consent to interception has been given. The Commission is also concerned that the UK does not have an independent national supervisory authority dealing with such interceptions.