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European Commission Sues Britain Over Phorm and Internet Privacy

European Commission Sues Britain Over Phorm and Internet Privacy

The European Commission has launched an infringement case against the United Kingdom over Phorm behavioral advertising technology, saying the technology violates EU ePrivacy and personal data protection rules in the ways it targets online advertisements at individual Internet users.

“We have been following the Phorm case for some time and have concluded that there are problems in the way the UK has implemented parts of EU rules on the confidentiality of communications,” said EU Telecoms commissioner Viviane Reding, in a statement. “Technologies like internet behavioral advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules. These rules are there to protect the privacy of citizens and must be rigorously enforced by all Member States.”

BT Trials Phorm After Six-Month Delay

It was supposed to begin in April, but was put on hold, supposedly for technical reasons. It’s drawn a massive fallout of criticism and it’s being investigated by the European Commission. But now British Telecom (BT) is going ahead with its third trial of the Phorm ad-serving technology, known as Webwise.

Those taking Phorm will get a unique identifier that tracks their browsing habits online and targets ads to them, according to ZDNet.

According to BT:

"Around 10,000 customers will be invited to opt in to the trial when they commence their browsing session. We will issue invitations at random."

EU Questions UK On Phorm

EU Questions UK On Phorm

Just when one storm regarding Phorm – a system that tracks the habits of web users to online ads can be more firmly targeted at them – dies down, another rises.

This time it’s EU commissioner Viviane Reding who wants answers from the British government as to whether the system breaches European data regulations. Three British ISPs (TalkTalk, BT and Virgin Media) have already signed up to use the service, and BT is due to start trialing it again, following two earlier trials which were conducted without the consent of customers, although the British Information Commissioner ruled that no action could be taken against BT for those because it would have been too complex to explain to customers.

Online Ad System Phorm Problematic

Since it signed up three British ISPs – BT, Virgin, and CarphoneWarehouse – to a trial of its online ad system, Phorm has been coming under fire.   The idea itself is very clever, as it matches a user’ssurfing habits with ad channels in order to produce personally targeted ads, using keywords in the sites visited.   However, although Phorm has been praised by some for its data protection, itwas rapped at a meeting for its security problems. According to the BBC, at a meeting, Dr Richard Clayton, a Cambridge University professor and treasurer of theFoundation for Information Policy Research, explained that when a user visits a page, in some instances a request will bounced between Phorm and the page three times before completion, which left itopen to hacking. He’d been invited by the company to look at Phorm’s architecture.   "I don’t think it improves the stability of the internet," he said.  Phorm’s chief executive, Kent Ertegrul, explained this happened in under 1% of cases, and didn’t affect the user experience. He also said that after taking legal advice, he was satisfiedthat Phorm didn’t break any UK privacy laws, and actually had the power to transform the Net.   "The internet today is two to three professionals – Microsoft, Yahoo and Google – and 9,999,999 hobbyists. Phorm makes all websites capable ofmaking a living."

Is Phorm Legal?

Is Phorm Legal?It seems as if each passing day brings more controversy about the online ad service Phorm, which is being deployed in Britain. First came questions about userprivacy, then one of the ISPs taking it on made it an opt-in service.   Now a policy group, the Foundation for Information Policy Research (Fipr) has putforward the argument that Phorn is illegal under UK law.   Phorm’s system works by making note of the sites a user visits, trawling the sites and matching keywords against a user profileto create more highly targeted advertising. However the ads only come from sites that have signed up with Phorm.   So what makes it illegal? According to the BBC, in an open letter to theInformation Commissioner, Fipr argues that the technology contravenes the  Regulation of Investigatory Powers Act 2000 (Ripa), which is intended to protect users from the unlawful interceptionof information. Fipr also believes Phorm should have the consent of websites as well as users.   Fipr’s treasurer, Richard Clayton, said,   "The Phorm system is highly intrusive;it’s like the Post Office opening all my letters to see what I’m interested in, merely so that I can be sent a better class of junk mail. Not surprisingly, when you look closely, this activity turnsout to be illegal.”   Three ISPs – BT, Virgin and TalkTalk –have signed up for Phorm, but TalkTalk has made the service an opt-in for its customers.   Not surprisingly, Phorm says it doesn’t breach any laws.

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