• by Wendy Davis  @wendyndavis, February 18, 2009

European privacy watchdogs are continuing to press U.K. officials to take action against an Internet service provider that tested Phorm's behavioral ad platform without notifying subscribers.

"The Commission may have to proceed to formal action if the U.K. authorities do not provide a satisfactory response to the Commission's concerns on the implementation of European law in the context of the Phorm case," a European Commission spokesperson said. "The European Commission takes the data privacy of citizens very seriously and is therefore asking the U.K. authorities to ensure that they fully comply with their obligations under EU law."

In 2006, the broadband company BT Group secretly deployed Phorm's behavioral targeting platform in a two-week test that involved 18,000 users. News of the test surfaced last year on the whistle-blowing site Wikileaks.

Since news of the test broke, the European Commission has made three separate requests to the U.K. authorities asking what--if anything-- they intended to do about the test, which potentially violated Europe's sweeping data privacy rules.

The European Commission made its most recent late last month. An agency spokesperson said the group expects to receive an answer soon.

Phorm, registered in the U.S. and with offices in New York and London, works with broadband providers to serve ads to subscribers based on their Web-surfing and search histories.

Late last year, BT Group concluded another (non-secret) test of Phorm's platform, following which the Internet service provider said it intended to roll out the system throughout its network.

Phorm says it does not store users' IP addresses, and that it serves ads anonymously. But privacy advocates argue that this type of platform is more intrusive than other, older types of behavioral targeting because Internet service providers have access to every site that consumers visit. By contrast, older behavioral targeting companies only track consumers across a limited number of sites within a network.

Phorm has consistently said that it intends to enter the U.S. market. But some U.S. lawmakers have expressed concerns about behavioral targeting platforms that serve ads based on information gleaned from Internet service providers. Potential rival NebuAd retreated from plans to roll out a similar ad-targeting platform after Congress held hearings about whether the platform violated users' privacy.