Shares in Phorm, the "deep packet inspection" company, were punished yet again over the weekend after the UK's Office of Fair Trading (OFT) announced an investigation into its controversial behavioural tracking software. To the echo of resounding cheers on the part of privacy advacates, Phorm's already battered stock value crashed by a further 27 per cent. Martyn Warwick reports.
Phorm's "Webwise" software is a surveillance system tracks just where an individual goes on the Internet, maintains a record of sites visited and then serves-up advertising allegedly targeted at, and closely aligned to, the users' "interests". To identify such "interests" Webwise leeches on an individual's web history, sucks thr blood out of it and passesdetails of that "behavioural activity" on to advertisers. In other words it spies on people.
Now though, the OFT says it is to examine the use of personal data in website advertising and behavioural tracking" systems.
In a statement the government watchdog says, "We will look at behavioural advertising where information on a consumer's online activity is used to target the Internet advertising they see. We will also a examine the practice of tailoring prices to individual consumers on the basis of their personal data."
It is well known that many advertisers would love to have a system of access to masses of personal data on consumers so that they could charge more for goods and services to some individuals than they would to others. In other words these rip-off merchants want a method and a charter to legitimise their profiteering.
Hopefully, in the UK at least, they are not going to get it.
In response to news of the probe into its system a Phorm spokesperson basically copped-out of either acknowledging or addressing reality by saying, "Since our service is not currently live in the UK it is not appropriate to comment on the study at this stage."
Phorm has until September 18 to submit its response to the looming OFT investigation. The Loss-making company has been bleeding cash and senior executive staff after being hit, time and again, by controversy and allegations that its product drives a coach and horses through European data protection laws.
Originally, Phorm did potentially lucrative deals with three of Britain's biggest ISPs - BT, Talk Talk and Virgin Media and trouble first loomed when it emerged at BT had trialled "Webwise" (twice) without bothering to tell those of its subscribers involved in the experiment that they Internet activities were being covertly spied-upon and recorded.
The resulting outcry and investigations gave BT pause for thought and soon the UK's big incumbent telco did a massive U-turn and dumped its plans to introduce Phorm's surveillance software. When it did so, Phorm's share price plummeted by 40 per cent.
Since then both Talk talk and Virgin Media have announced that that they are putting Webwise deployment on indefinite hold. Then advertisers too began to desert the sinking ship.
Since it became evident that it is on a hiding to nothing at home, Phorm has shifted its focus to other markets, most noticeably to South Korea, where, it evidently hopes, it will get an easier ride from the authorities, regulators and the media.
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