• by Wendy Davis , Staff Writer @wendyndavis, November 3, 2009

European privacy regulators are continuing to press the U.K. to take action regarding secret tests conducted by controversial behavioral targeting company Phorm. The European Commission, which commenced legal proceedings in April, has now taken the case to the next level, according to The Register. If the U.K. government doesn't satisfy the European Commission within the next two months, the agency will take the case to the European Court of Justice, The Register reports.

The dispute stems from tests of Phorm's behavioral targeting platform. Phorm, like the now-defunct NebuAd, targets people based on information gleaned from Internet service providers. In 2006 and 2007, the company, along with U.K. Internet service provider BT Group, conducted secret trials of the technology. Last year, Phorm and BT conducted a third round of tests, but sought users' opt-in consent.

Still, the earlier, secret tests arguably violated Europe's data protection laws, which are far broader than privacy laws in the U.S. In fact, several months ago, EU Commissioner for Information Society and Media Viviane Reding said that European law requires that consumers consent to behavioral advertising.

Despite the European regulators' stance, the British authorities have so far supported Phorm. Not only did the government fail to take action regarding the secret tests, but the U.K. Department for Business, Enterprise and Regulatory Reform insists that Phorm is "capable of being operated in a lawful, appropriate and transparent" manner.

Phorm's model alarms privacy advocates because broadband providers have access to users' entire Web history, including search queries and visits to noncommercial sites. Older, cookie-based behavioral targeting platforms only collect information from a limited number of commercial sites within a network.

Phorm says that it doesn't store users' personal data or browsing histories. Phorm, which has offices in New York, London, Moscow and Seoul, has not yet tested its system in the U.S.

But its U.S. counterpart, the now defunct NebuAd, did test a similar system last year. The company planned to do a broader roll-out, but suspended those plans after Congress complained. Meanwhile, a lawsuit against the company for allegedly violating users' privacy is still pending in federal district court in California.