p2pnet news view | Advertising:- Not to put too fine a point on it, Phorm is Phuked.

Former partner British Telecom,  BT, has dropped the company.

Based in the US, Phorm specialises in siphoning up online  user information for behavioural targeting, intrusive targeted advertising based on what people are doing online, and where they’re doing it — information gathered without their up-front consent.

Phorm’s Webwise uses Deep Privacy Invasion, or Deep Packet Inspection, to do what it does.

But if Phorm has been earning its living by targeting people, activist Alex Hanff has been targeting Phorm and it’s largely due to his efforts that the company hasn’t been able to use the undeniable PR and marketing skills of its boss, master sophist Kent Ertugrul, to weasel out of allegations that what it does is wrong.

European commissioner for the information society and telecoms Vivian Reding recently echoed words first spoken by Sir Tim Berners-Lee, the man who invented the web.

“A person’s information can only be used with their prior consent,” she said. “We cannot give up this basic principle, and have all our exchanges monitored, surveyed and stored in exchange for a promise of ‘more relevant’ advertising! I will not shy away from taking action where an EU country falls short of this duty.”

Now, “Heads up,” says Alex in an email. “Here’s another one for you, Jon ”

He points to his site, NoDPI, where you’ll find »»»

The last 5 days has been beyond a doubt the most difficult week Phorm has had to face since the story first broke in February 2008 that they had partnered with BT Group PLC, Virgin Media and TalkTalk.

On Monday shortly after midnight, Richard Wray from the Guardian published a story stating BT Group had announced they have no plans to use Phorm’s WebWise technology to intercept and copy all non-encrypted web communications of their customers for the purpose of behavioural advertising.

Phorm’s shares on AIM collapsed as a result shedding 40% of their value before markets closed.  Phorm stated in a press release:

As regards our UK deployment, Phorm’s activities remain ongoing and we look forward to creating the conditions necessary for UK ISPs to move to deployment. In parallel, we continue to focus considerable effort on faster moving overseas opportunities. In so doing we have already minimised our dependency on the deployment by any single ISP or in any particular market.

But then by the end of Monday it was reported that TalkTalk had also decided not to go ahead with plans to deploy the technology with TalkTalk’s CEO Charles Dunstone quoted by The Times as stating:

We were only going to do it if BT did it and if the whole industry was doing it. We were not interested enough to do it on our own.

Phorm’s shares tumbled a further 13% on the news as they were forced to release the following statement to investors:

Unfortunately, on 7 July 2009, TalkTalk Telecom Ltd, a wholly owned subsidiary of the Carphone Warehouse Group PLC, terminated its agreement with Phorm. The Directors note that this relationship had not extended to any form of trial in contrast to BT and some international ISP’s, as noted above.

Then on Thursday 9th July Virgin Media, Phorm’s third and final UK partner, landed the finishing blow to Phorm’s ambitions in the UK:

Over the last 18 months, Virgin Media has conducted a comprehensive technical and legal assessment of Phorm’s technology and consumers’ attitudes towards interest-based advertising. This review has not involved the deployment of Phorm technology across our network.

…

We continue to believe interest-based advertising has potentially important benefits for consumers, internet service providers and website owners,” the spokesperson said. “However, given the fast moving nature of the sector, Virgin Media is reviewing potential opportunities with suppliers including Phorm prior to making any commitment to launch any of these technologies.

Whereas Virgin Media’s statement was not as severe as TalkTalk or BT it doesn’t bode well for the markets opening to the news this morning.

It is hard to see Phorm recovering from this and it is fair to say that their plans for the UK will now have to be abandoned.

Of course it is not just the UK Phorm have problems with – the UK problems extend to the EU as a whole and with the EU Commission in the process of taking legal action against the UK Government for failing to uphold EU Privacy Directives by allowing Phorm to run covert trials of their technology on BT customers in 2006/2007; it is unlikely any other EU Countries are going to welcome them either.

Furthermore, with Congress in the US in the process of drafting a Bill to outlaw the use of DPI for Behavioural Advertising unless it is strictly based on informed consent (Opt-In) in response to NebuAd’s activities last year; with Canada’s Privacy Commissioner launching a DPI information site which is 99% negative  – it looks like North America is also out of bounds for Phorm.

Phorm are playing the PR game now and claim to have ongoing discussions in 15 international markets as well as currently testing their technology in South Korea.  However it is difficult to believe this with any degree of seriousness given that Phorm have been significantly less than honest in their press releases over the past 18 months.  One would be forgiven for believing that what we are seeing is a company in the final days of its life and my prediction is they will struggle to make it through to the end of the summer.

On Tuesday, myself and two other NoDPI members were invited to give oral evidence at the APComms Inquiry into Internet Communications at Portculis House in Westminster.  Phorm were invited and arrived 50 minutes late but it was clear to most present that they were on the ropes.  There was none of the usual confidence from Radha Burgess or her colleague and they spent their time stumbling over most of the questions asked of them – it was embarrassing to watch.

So it is almost the end of an era with regards to Phorm – however my work has not stopped, in fact it just became even more important.

I recently joined the staff at Privacy International and will be leading a global campaign against the unethical business practices being used by the advertising industry.  I will be addressing the issues surrounding Opt-Out marketing and advertising systems across the world and highlighting the impotence of such models whilst pushing for regulatory reform to make explicit informed consent (Opt-In) the baseline at an international level.

I am incredibly proud to have been involved in the campaign to stop Phorm – over the past 18 months I have seen the general public rally together to turn a grass roots campaign into one of the most phenomenal successes for democracy that I have ever witnessed.

We have been libelled, attacked and ridiculed from many angles with some of the most disgusting behaviour one will ever see from what was once a 1 billion dollar company and their supporters.  But we did not yield, we did not stoop to their levels and most importantly we supported each other through the hard times and came out the other side victorious.

It just goes to show that if enough people really make an effort to engage the system to force a change, it can happen – and I sincerely hope I can encourage the rest of the world to rally to the call in my ongoing work to end the regime of immoral and unethical business practices in the realm of personal data and communications.

I warned Emma Ascroft from Yahoo on Tuesday that my work was not complete and that they are on the hitlist – as are many others.  I would suggest they get their houses in order because it is time they realised that without the support of their consumers, they will simply cease to exist.

My sincere thanks to all who have played a part in the past 18 months work – let us take this campaign from strength to strength and make privacy a global priority.

Finally, Alex features a quote from former BT chief press officer Adam Liversage:

“A year of the most intensive, personal-reputation-destroying PR trench warfare all comes to nothing at the end of the day.

“Phantastic …”

Well done Alex, and everyone else.

P2P Power Rulz.

Jon Newton – p2pnet

Follow p2pnet on Twitter.

First they ignore you, then they laugh at you, then they fight you, then you win ~ Mahatma Gandhi

dropped the company – BT gives Phorm the boot, July 9, 2009
recently echoed – ‘Piracy is sexy’ – Vivian Reding, July 10, 2009

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This entry was posted on Friday, July 10th, 2009 at 10:21 am and is filed under Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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