By Chris Williams for The Register. This story has
been reproduced with permission.
Privacy activists have greeted the news as a victory for their
campaign against the firm, which was sparked by revelations in
The Register that BT had secretly trialled Phorm's
advertising targeting system on tens on thousands of customers.
Alex Hanff, a prominent member of the campaign, who was recently
publicly attacked by Phorm on its rebuttal website, said: "I am
obviously ecstatic. My heartfelt thanks go to everyone who has been
involved."
BT's announcement comes a day before MPs and peers of the All
Party Parliamentary Communications Group are due to begin an
investigation of internet privacy. Their intervention follows the
EU's move to sue the UK government over its alleged failure to
properly implement European privacy laws with respect to the
trials, drawing further bad publicity to the venture.
The decision deals a massive blow to Phorm. At the time of
writing, its shares were trading down more than 25 per cent at
£3.53.
BT Retail is the largest ISP in the UK with about 4.8 million
subscribers. It was a close partner in the development of Phorm's
technology. Stratis Scleparis - chief technology officer at BT
Retail at the time of the secret trials - was convinced enough of
the money-making potential of the system to take a job and share
options with the smaller firm.
BT's public statement today adopted Google's preferred "interest
based advertising" terminology. It made no mention of the fierce
reaction to its relationship with Phorm.
"We continue to believe the interest based advertising category
offers major benefits for consumers and publishers alike. However,
given our public commitment to developing next generation broadband
and television services in the UK, we have decided to weigh up the
balance of resources devoted to other opportunities," it said.
"Given these resource commitments, we don't have immediate plans
to deploy Webwise today. However, the interest based advertising
market is extremely dynamic and we intend to monitor Phorm's
progress with other ISPs and with Webwise Discover before
finalising our plans."
Webwise Discover is a sideline in content targeting announced
last month.
In a statement to investors, Phorm sought to soothe worries BT's
decision may jeopardise its business. It was also forced to
sell a large chunk of equity at a much reduced price last
month, in order to maintain operations.
"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," it said, adding that it was "engaged" with ISPs in 15
worldwide markets.
Virgin Media, which has not carried out any network trials of
Phorm's technology, issued a statement reacting to BT's decision.
It signed a memorandum of understanding with Phorm, similar to
BT's, as did TalkTalk. These were not commitments to deploy the
system however.
It said: "We continue to believe interest-based advertising has
potentially important benefits for consumers, internet service
providers and website owners. However, given the fast moving nature
of the sector, Virgin Media intends to extend its review of
potential opportunities with suppliers, including Phorm, prior to
making any commitment to launch any of these technologies.
"We recognise some consumers have significant concerns about the
potential implications of interest-based advertising for their
privacy. Virgin Media is committed to ensuring that any future
deployment complies not only with the relevant legal requirements
but - as an absolute minimum - the best practice guidelines
contained in the Internet Advertising Bureau's recently published
code of practice."
The cable firm said it would be open with customers about its
plans as they develop.
Phorm's June fundraising round brought in £15m. Last year it
spent £1.1m per month for zero revenue, although its last financial
report said it had significantly reduced costs since
Christmas.
© The
Register 2009
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