A Phormula for disaster
It started out as a twisted Valentine's Day present in the form of an announcement by Phorm, a U.S. digital technology company. Phorm announced on Feb. 14 that it had signed deals with UK ISPs Virgin Media, Carphone Warehouse, and BT to place Phorm's technology on their networks, where it would access users' datastreams, unless the users opted out.
Yesterday, it appeared that Phorm's romance with the three ISPs came to an end, with BT's announcement that it was, for the time being, abandoning the idea of partnering with Phorm to sell clickstream data to advertisers.
The EU and various Internet privacy groups raised a ruckus over the plan that Phorm would use so-called deep packet inspection in a behavioral ad targeting service, where advertisers would pay for the datastream information so that they could more accurately target online advertising. Phorm would split the advertising revenue with the ISPs that it signed deals with.
In April, the EU took the UK to task over its implementation of some of the EU rules on confidentiality of communications, threatening to take the UK to court if they did not alter their laws on the matter. But it isn't just European countries that believe Phorm to be in, well, bad form.
Even though the company swears that all data collected is anonymous, last August, Congressional hearings in the U.S. caused cable TV giant and ISP Charter Communications to drop its plans to use NebuAd, a company with techniques similar to Phorm's. NebuAd folded earlier this year.
Part of the squeamishness various governments and privacy groups have experienced has to do with the fact that Phorm, which is based in Delaware in the U.S., used to be called 121Media, an adware company. While privacy groups considered their product to be spyware, 121Media always hotly denied this.
According to Financial Times, after BT's announcement Monday, shares in Phorm dropped by 40%. For its part, Phorm simply said they were in a position where they were not dependent on any one market or ISP, and so would continue their endeavors overseas.
What is your reaction to BT's announcement Monday? And, on a lighter note, if an entity like Phorm used your clickstream info to target ads, what kinds of ads do you think would start showing up when you surf?