BT Backlash Phorming

Behavioral targeting company Phorm seems to be suffering from a privacy-related backlash in the U.K.

This week, Neil Berkett, CEO of Internet service provider Virgin Media, told investors in New York that the company wasn't likely to work with Phorm any time soon. "Our next initiative probably won't be with the Phorms of the world," he said, according to paidcontent.

The rebuff is significant because Phorm earlier announced that Virgin Media would be one of three ISP partners to use its platform. (The others are BT Group -- currently testing Phorm's platform -- and Carphone Warehouse.) Phorm, like former rival NebuAd, obtains information about people's Web activity from ISPs and then serves users ads based on the sites they've visited and/or their search queries.

The Virgin rejection came on the heels of a public repudiation of Phorm by the ISP Orange. "Privacy is in our DNA," Orange's Paul-François Fournier, senior vice-president of Orange's online advertising division, told the Financial Times. "We have decided not to be in Phorm because of that . . . The way it was proposed, the privacy issue was too strong."

Phorm recently launched a test of its platform, Webwise, with U.K. service provider BT Group. The companies say that users must opt in, but privacy advocates have questioned the procedure. They say that the opt-in page, which just asks people whether they want to see "more relevant" ads, doesn't make clear that Phorm will scrutinize their Web activity. (For that information, users must click to other Webwise pages.)

Phorm is touting its platform as a way for ISPs to increase their revenue by getting in the ad business.

But perhaps the ISPs are realizing that the proposition might be a public relations disaster should angry subscribers voice complaints.

Consider, in the U.S., NebuAd has retreated from the business, but still faces fallout from ill-fated tests earlier this year. This week, a group of 15 Web users sued the company, along with six ISPs, for violating federal wiretap laws.

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