UK internet service provider TalkTalk has pulled the plug on its agreement with online behaviour tracking firm Phorm.
It follows news earlier in the week that BT had no immediate plans to use the service.
Phorm has developed technology which collects information on web use in order to better target adverts but it has proved extremely controversial.
The loss of its key partners saw Phorm's shares tumble by more than 50%.
Phorm said that TalkTalk, the second biggest broadband provider in the UK behind BT, had ended its agreement with the firm.
TalkTalk's plans were not as advanced as BT which had undertaken three trials of the technology.
"The directors note that this relationship had not extended to any form of trial in contrast to BT and some international internet service providers," a statement from Phorm read.
It also noted that "privacy was not a factor" in BT's decision to pull the plug on the technology.
Virgin Media, which also expressed interest in the system, was still reviewing it, according to Phorm.
Phorm is currently trialling its software with South Korea's largest ISP and is in discussion about the use of the technology with ISPs in 15 other countries.
Shares in Phorm slumped a farther 13% following the announcement.
Wednesday, 8 July 2009
Monday, 6 July 2009
BT drops Phorm targeted ad service after customers cry foul over privacy
BT has quietly ditched a controversial system that tracks the internet habits of its customers, developed by the technology firm Phorm, which has been attacked as online snooping by privacy campaigners. BT was a key player in the development of Phorm's Webwise system, which uses information about which sites an internet user visits to target them with relevant advertising on subsequent pages.
It carried out secret tests of the technology in 2006 and 2007 which are now the basis of a European commission investigation into the UK government's failure to protect its citizens online. Last year BT carried out a proper consumer trial of Phorm's technology. The results have been keenly awaited, not just by management at Phorm – whose chairman is former chancellor Norman Lamont – but by its other two potential partners, Virgin Media and TalkTalk.
But BT has decided not to proceed with rolling out Webwise to its 4.8 million broadband customers, dealing a heavy blow to AIM-listed Phorm. The company, which has received complaints from customers about Phorm, said the decision was down to its need to conserve resources as it looks to invest £1.5bn in putting a next-generation super-fast broadband network within reach of 10 million homes by 2012. Privately, however, BT bosses have been increasingly concerned about consumer resistance to advertising based on monitoring users' online behaviour and specifically about the backlash against Phorm.
"We continue to believe the interest-based advertising category offers major benefits for consumers and publishers alike," said a spokesman for BT. "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.
"Given these 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 …before finalising our plans."
The news will throw the spotlight on Virgin Media and TalkTalk, which recently snapped up rival internet service provider Tiscali. Between them, BT, Virgin Media and TalkTalk control about three-quarters of the UK broadband market.
Virgin Media is understood to remain interested in the concept of behavioural targeted advertising, not least for use with its video on demand service, and is in talks with a number of potential technical partners. But the internet service provider is understood to have cooled on the idea of using Phorm's technology.
TalkTalk, meanwhile, has said it is keeping an eye on Webwise but any implementation would have to be done solely on an opt-in basis – customers would not be automatically connected to the service – and the company currently has no time–scale for deployment.
A spokesman for Phorm said BT's decision was not the end of the world, not least because it has been expanding overseas and is now in talks with potential ISP partners in 15 other countries. This year the company announced a trial of its technology with KT, South Korea's largest ISP, and another overseas deal is expected to be announced shortly.
"It is not a great surprise to us, to be honest. It has been a long process and we have never had a definitive date on a launch," said a spokesman. "Phorm is not just dependent on a UK model with one ISP."
But it is the latest in a series of setbacks for Phorm, which has become something of an internet industry bete noire. Amazon recently "opted out" of Webwise, saying it did not want traffic to its websites monitored by ISPs that sign up to use the technology. Google and Bebo are also considering opting out, potentially depriving Phorm of crucial information about internet users' tastes.
The UK government is also understood to have opted its domain names – such as www.direct.gov.uk – out of Webwise amid concerns about privacy. Although ISPs, media companies and even some politicians see Phorm as a way in which UK companies can claw back some share of the internet advertising market from the clutches of Google, the web's creator, Sir Tim Berners-Lee, has criticised it as unjustifiable online snooping.
It carried out secret tests of the technology in 2006 and 2007 which are now the basis of a European commission investigation into the UK government's failure to protect its citizens online. Last year BT carried out a proper consumer trial of Phorm's technology. The results have been keenly awaited, not just by management at Phorm – whose chairman is former chancellor Norman Lamont – but by its other two potential partners, Virgin Media and TalkTalk.
But BT has decided not to proceed with rolling out Webwise to its 4.8 million broadband customers, dealing a heavy blow to AIM-listed Phorm. The company, which has received complaints from customers about Phorm, said the decision was down to its need to conserve resources as it looks to invest £1.5bn in putting a next-generation super-fast broadband network within reach of 10 million homes by 2012. Privately, however, BT bosses have been increasingly concerned about consumer resistance to advertising based on monitoring users' online behaviour and specifically about the backlash against Phorm.
"We continue to believe the interest-based advertising category offers major benefits for consumers and publishers alike," said a spokesman for BT. "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.
"Given these 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 …before finalising our plans."
The news will throw the spotlight on Virgin Media and TalkTalk, which recently snapped up rival internet service provider Tiscali. Between them, BT, Virgin Media and TalkTalk control about three-quarters of the UK broadband market.
Virgin Media is understood to remain interested in the concept of behavioural targeted advertising, not least for use with its video on demand service, and is in talks with a number of potential technical partners. But the internet service provider is understood to have cooled on the idea of using Phorm's technology.
TalkTalk, meanwhile, has said it is keeping an eye on Webwise but any implementation would have to be done solely on an opt-in basis – customers would not be automatically connected to the service – and the company currently has no time–scale for deployment.
A spokesman for Phorm said BT's decision was not the end of the world, not least because it has been expanding overseas and is now in talks with potential ISP partners in 15 other countries. This year the company announced a trial of its technology with KT, South Korea's largest ISP, and another overseas deal is expected to be announced shortly.
"It is not a great surprise to us, to be honest. It has been a long process and we have never had a definitive date on a launch," said a spokesman. "Phorm is not just dependent on a UK model with one ISP."
But it is the latest in a series of setbacks for Phorm, which has become something of an internet industry bete noire. Amazon recently "opted out" of Webwise, saying it did not want traffic to its websites monitored by ISPs that sign up to use the technology. Google and Bebo are also considering opting out, potentially depriving Phorm of crucial information about internet users' tastes.
The UK government is also understood to have opted its domain names – such as www.direct.gov.uk – out of Webwise amid concerns about privacy. Although ISPs, media companies and even some politicians see Phorm as a way in which UK companies can claw back some share of the internet advertising market from the clutches of Google, the web's creator, Sir Tim Berners-Lee, has criticised it as unjustifiable online snooping.
Phorm shares fall as BT opts out
Shares in the online ad firm Phorm have fallen by more than 40% after BT said it had no immediate plans to use the service that tracks online behaviour.
Phorm serves up adverts related to a user's web browsing history, which it monitors by taking a copy of the places they go and search terms they look for.
However, it came in for considerable criticism from privacy groups and prompted an EU investigation.
The firm's shares were down 43.16% at 270p at 13:13 BST.
Phorm builds a profile of users by scanning for keywords on websites visited and then assigns relevant ads.
It has proved controversial because it scans almost all sites a user visits and there is an ongoing political debate about how a user gives consent.
Phorm had conducted trials of its technology with BT, which it marketed as Webwise.
On hold
A spokesman for British Telecom, Mike Jarvis, told the BBC that they were not completely closing the door on Phorm's Webwise service.
"We're interested in this area [targeted online advertising] but for now we have no immediate plans.
"It's more a case that we have other stuff to work on - Project Canvas, rolling out the fibre network and so forth - so we've taken a step out of Phorm and will see how it develops.
"[Our decision has] nothing to do with cost or privacy, it's about resources and priority," he added.
In April, Amazon blocked Phorm from scanning its web pages to produce targeted advertising, as has the UK government, citing privacy concerns.
Phorm declined an interview request, instead issuing a statement saying its activities "remain ongoing" and that it was looking forward " to creating the conditions necessary for UK ISPs to move to deployment".
"We continue to focus considerable effort on faster moving overseas opportunities," the statement read.
"In so doing we have already minimised our dependency on the deployment by any single ISP or in any particular market.
"In addition to making excellent progress in South Korea, we are engaged in more than 15 markets worldwide including advanced negotiations with several major ISPs."
Phorm serves up adverts related to a user's web browsing history, which it monitors by taking a copy of the places they go and search terms they look for.
However, it came in for considerable criticism from privacy groups and prompted an EU investigation.
The firm's shares were down 43.16% at 270p at 13:13 BST.
Phorm builds a profile of users by scanning for keywords on websites visited and then assigns relevant ads.
It has proved controversial because it scans almost all sites a user visits and there is an ongoing political debate about how a user gives consent.
Phorm had conducted trials of its technology with BT, which it marketed as Webwise.
On hold
A spokesman for British Telecom, Mike Jarvis, told the BBC that they were not completely closing the door on Phorm's Webwise service.
"We're interested in this area [targeted online advertising] but for now we have no immediate plans.
"It's more a case that we have other stuff to work on - Project Canvas, rolling out the fibre network and so forth - so we've taken a step out of Phorm and will see how it develops.
"[Our decision has] nothing to do with cost or privacy, it's about resources and priority," he added.
In April, Amazon blocked Phorm from scanning its web pages to produce targeted advertising, as has the UK government, citing privacy concerns.
Phorm declined an interview request, instead issuing a statement saying its activities "remain ongoing" and that it was looking forward " to creating the conditions necessary for UK ISPs to move to deployment".
"We continue to focus considerable effort on faster moving overseas opportunities," the statement read.
"In so doing we have already minimised our dependency on the deployment by any single ISP or in any particular market.
"In addition to making excellent progress in South Korea, we are engaged in more than 15 markets worldwide including advanced negotiations with several major ISPs."
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