Phorm’s recent backing by three hefty internet service providers has sparked fears over privacy issues on the web. BT, Virgin secure them a slice of the expanding online advMedia and Carphone Warehouses’ Talk Talk broadband business, which together own 70% of the UK broadband market, signed up this February to a package that will doubtless ertising pie.
Phorm’s recent backing by three hefty internet service providers has sparked fears over privacy issues on the web. BT, Virgin Media and Carphone Warehouses’ Talk Talk broadband business, which together own 70% of the UK broadband market, signed up this February to a package that will doubtless secure them a slice of the expanding online advertising pie. Fundamentally, Phorm’s service, WebWise, plans to track and record users’ browsing habits in order to target adverts more accurately. The question is, does this count as an invasion of privacy?
The core of Phorm’s package is its design. Significantly, it registers all of the websites someone visits within a browsing session as opposed to the content of a single web page. It creates a user profile by filtering websites and matching keywords with the content of the web page. By discovering individual patterns of behaviour, ISPs will gain the insight and power to place ads with more specific criteria and therefore pledge a greater success rate to their advertisers. For instance, an Italian restaurant chain could stipulate that it wishes ads to reach only those customers who have first looked at the websites of Pizza Hut and Ask and searched for the term ‘restaurant italian’ in a search engine. Different websites may hold registration details of their own users but are unlikely to know which other sites and services they utilise – such data is usually known only by the ISP.
There are several legal concerns to consider, namely consent and interception. According to the Foundation for Information and Policy Research (FIPR), Phorm contravenes the Regulation of Investigatory Powers Act 2000 (RIPA). In their open letter to the Information Commissioner Richard Thomas, they argue that, to ensure compliance with RIPA, Phorm must secure the permission of web users. They will have to opt in to such a system, not simply opt out. Moreover, website operators should also be consulted as the content on their pages is part of the tracing procedure.
Top anti-malware firms like Trend Micro are also casting doubt on Phorm’s legitimacy, which holds particular weight as they have been linked to spyware in the past. The Open Rights Group (ORG) mirrored these concerns stating that “Until we know exactly how Phorm works, and across whose networks our data will flow, speculation about the privacy implications will continue”.
Meanwhile, over 5,000 people have signed a petition which claims that Phorm violates privacy and calls on Gordon Brown to review the country’s privacy laws. A Home Office Report found that targeted online advertising services that were carried out “with the highest regard to the respect for the privacy of ISPs’ users and the protection of their personal data” were lawful as long as an ISP initially asked for the user’s consent. The Information Commissioner’s Office has asked Phorm for the particulars of its technological functions and is due to make a report on the privacy aspect of the service soon.
Alongside the legal question mark is an ethical unease. Nerves are clearly touched among FIPR executives. Treasurer Richard Clayton compared the “highly intrusive” system to the Post Office opening his letters to see what he’s interested in, merely so he can be sent a better class of “junk mail”. Bloggers have been leaving angry comments on forums. Some are disturbed by the idea of their behaviour being logged full-stop, fearing that the infrastructure is capable of more ominous applications. Others are infuriated at their individual privacy being violated for the gain of big companies.
However, numerous bloggers have been defending Phorm. They acknowledge that advertising essentially funds content on the internet. Indeed, it is somewhat naive to expect free access to substance and innovation without a financial buttress. So if advertising is a necessary feature of the online arena, why shouldn’t those adverts be tailored to their audience? Surely it is akin to having a personal shopping assistant offering you things you might actually want and bypassing things you dislike.
Phorm has said that a decision over open consent had not been taken and would remain at the discretion of the ISPs. In their defence, they have stated their belief of compliance with RIPA and the Data Protection Act insisting that customer’s identities are in no danger of being revealed, as each user is assigned a random number when they go online and a product category-based profile is compiled. Moreover, there is no issue over data storage as any information collected about searches and specific sites visited is immediately deleted.
This declaration has been backed up by two independent auditors of the company - 80/20 Thinking and Ernst & Young. In fact, Phorm are so confident that they are a victim of spurious propaganda that chairman Kent Ertugrul invited the most technologically savvy representatives of the privacy community to form an inspection committee to regularly spot check what they do. Furthermore, he refutes accusations that the company used to be involved in the spyware industry by insisting that their contribution was only to adware and that they chose to leave the business because of its dubious procedures.
Whatever the justification, these doubts over privacy infringement are beginning to form a tangible presence in the market, as the drop in Phorm shares proves. It would appear that confidence needs to be restored in the firm if they are to succeed. Perhaps it will in fact take a court hearing to determine once and for all whether Phorm’s WebWise is welcome. Justin Drummond,
Chief Executive - Media Corporation plc
Justin Drummond founded Media Corp in February 2000, six years after his first marketing business was established. Justin saw Media Corp listed on the London Stock Exchange just a year after its formation, via the reverse takeover of Chrome Technology plc in May 2001. Justin has overseen the rapid growth of Media Corp and was instrumental in the £14 Million institutional placing in March 2005 and the acquisitions of both Eyeconomy Limited, a leading digital agency, and Search Focus Limited, a specialist in sector specific search technology and marketing. 77 Queen Victoria Street, London, EC4V 4AY. Media Corporation plc is registered in England. Company Number: 04058698
Listed on the AIM market of the London Stock Exchange, Media Corp is a leading internet media and advertising group focused on website publishing and online advertising.
The Group has two principal divisions:
Website Publishing - Media Corp has a diverse publishing division specialising in online media. Our impressive portfolio of websites includes a number of market leading sites including www.gambling.com, www.onthebox.com, www.sport.co.uk, www.creditcardexpert.co.uk and www.flightcomparison.co.uk.
Online Advertising - Formed in 1996, Eyeconomy|NASH specialises in mass reach campaigns to over 30 Million unique consumers per month via its own proprietary ad-serving and tracking technology for clients including AOL, Dell and American Express.
www.eyeconomy.co.uk
www.mediacorpplc.com