Phorm Announces Losses of £16.6 million and is Poised for BT Trial
April 12th, 2008 by Linda Haywood Posted in Anti-Spyware Software, Consumer Protection, Internet Security, Politics, Webmaster Chat
Following our recent opinion pieces on Phorm, it has come to our attention that on Thursday 10th April, the company posted losses of $32.8 million (£16.6 million) which the it insisted were part of planned investments in infrastructure, people and technology. Last year, Phorm made a loss of $11.6 million -yet somehow they have raised $65 million equity this March according to their own reports.
The Information Commissioner’s Office (ICO), this week announced that they would stand back to allow Phorm to trial their controversial technology on 10,000 BT customers later this month. They appear to be satisfied with the explanation given by Phorm, that ISPs using the technology (so far Virgin, Talk Talk and BT look poised to use it) only hold users’ data for a moment and that each customer is given a randomly generated number to anonymise their data. Read the full ICO announcement here.
However, the Foundation for Information Policy Research (FIPR) says that the interception itself may be illegal. See below.
The crucial paragraphs regarding Phorm’s controversy are as follows:
“• Phorm will not and cannot ever store any personal information which can
identify a user
• Users will have a clear choice whether to turn Webwise on or off
• Our technology complies with all relevant data protection and privacy laws
including RIPA (Regulation of Investigatory Powers Act) and the Data Protection
Act”(Phorm In. Preliminary Results 10th April, emphasis by World’s Greatest Blog)
“Webwise assigns a unique, randomly-generated number to a user’s browser to preserve anonymity, then matches the categories of browsing activity with advertising. When the user’s interests match an advertiser category, the user can see a relevant ad in place of a generic, untargeted ad. The user doesn’t see more advertising, just more relevant advertising.”
(Company Website)
Despite the company’s insistence and their commissioning reports from Ernst & Young to verify their commitment to privacy, the Foundation for Information Policy Research still considers that the technology may well be illegal. Nicholas Bohm, General Counsel for the Foundation for Information Policy Research, said:
…the illegality stems not from breaching the Data Protection Act directly, but arises from the fact that the system intercepts Internet traffic. Interception is a serious offence, punishable by up to two years in prison. Almost incidentally, because the system is unlawful to operate, it cannot comply with Data Protection principles…
…BT now say they will no longer monitor their customers’ web browsing without their express permission, but they appear to ignore the fact that they can only legalise their activity by getting express permission not just from their customers, but also from the web hosts whose pages they intercept, and from the third parties who communicate with their customers through web-based email, forums or social-networking sites.
It appears that the ICO has deferred the issue of interception to the Home Office and Kent Ertugrul, Chief Executive of Phorm, has claimed the Home Office have given the green light in terms of their technology being within interception laws. We will attempt to verify this in the coming days.
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