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A data protection group has warned that opting out of Phorm will not prevent the technology from processing data that users enter through web site search portals. Companies such as Amazon, Wikipedia and LiveJournal have taken the decision to block the controversial advertising technology from scanning their sites because of the privacy implications. However, Open Rights Group executive director Jim Killock has since admitted that, even if web sites opt out of the programme, ISPs supporting Phorm will still be able to profile users visiting those sites. "This is because Phorm can scan search requests entered in those sites, even if it cannot detect the web site pages users are viewing," Killock said. "For example, even if Google opts out of Webwise, when a user types in a Google query and they are using BT, it will still go through Phorm before it reaches BT." Killock added that Phorm does not gain permission from either senders or receivers of the information before it processes the data. Phorm uses browsing information to serve accurately targeted advertisements, and is soon to be rolled out under the Webwise brand by internet service providers BT, Virgin Media and TalkTalk. However, as the time for deployment nears, the controversy surrounding the technology only seems to be increasing.

Wikipedia told the controversial U.K. advertising firm Phorm on Thursday not to spy on Wikipedia's users, saying the company's plan to monitor what sites people visit on the net invaded people's privacy. Wikipedia now joins Amazon.co.uk in opting out of the Big-Brother-esque marketing scheme and creating the possibility of a mass opt-out by the net's largest websites. Phorm wants to pay ISPs -- such as British Telecom -- to let it build marketing profiles of its subscribers by installing boxes inside the ISP that monitor every url users visit and every search they run. Using those profiles, Phorm can charge advertisers high rates to serve targeted ads. But in an email sent Thursday, Wikimedia.org told Phorm not to record anything about urls from domains it controls, ranging from Wikiquotes to Wikipedia -- one of the most popular sites on the net. Phorm operates an opt-out system for sites and ISP customers, but it would be virtually impossible to verify if the company actually complied with such requests. "The Wikimedia Foundation requests that our web sites including Wikipedia.org and all related domains be excluded from scanning by the Phorm / BT Webwise system, as we consider the scanning and profiling of our visitors' behavior by a third party to be an infringement on their privacy," the email read, according to a Wikimedia blog post.

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Online advertising firm Phorm is pressing ahead with plans to launch more than a year after it first drew criticism from some privacy advocates. Phorm executives will meet with members of the public on Tuesday, following a similar meeting in 2008. The service has proved controversial for some campaigners who believe it breaks UK data interception laws. The firm received clearance from the Home Office and police closed a file on BT trials of the technology. "We have been supported or endorsed by all of the leading stakeholders," Phorm chief executive Kent Ertugrul told BBC News. "Ofcom, the Information Commissioner's Office, the Home Office, leading privacy advocates like Simon Davies, the advertising industry and publishers have all backed our service," he said. He added: "We are very, very happy with where we are one year on." Trawling websites Phorm's system works by "trawling" websites visited by users whose ISPs have signed up to the service and for whom the technology is switched on, and then matches keywords from the content of the page to an anonymous profile. Users are then targeted with adverts that are more tailored to their interests on partner websites that have signed up to Phorm's technology.

On Monday, U.K.-based digital rights organization Open Rights Group submitted an open letter to major online media players, urging them to prevent ISP-level behavioral targeting firm Phorm from tracking user interactions on their Web sites. The letter, sent to Google, AOL, Microsoft, Facebook, Yahoo, Amazon and Ebay, said, "[ORG] believes that it is clearly in your company's interest, it is in the interests of all of your customers, and it will serve to protect your brand's reputation, if you insist that the Phorm/Webwise system does not process any data that passes to or from your website." "We have received the letter and are giving it careful consideration from privacy and business perspectives," a spokesperson for AOL and its social network Bebo told ClickZ News. Similarly, in reference to the ORG correspondence, a Google spokesperson told ClickZ, "We've received the ORG's letter, but we're still considering the points they raised, so we don't have a response to make at this time." According to information published on the British Telecom Web site (one of Phorm's ISP-partners,) site owners can specifically request that their properties are not "scanned" by Phorm's technology, by contacting the firm directly. Phorm announced deals with three major U.K. ISPs over a year ago, but its technology is still yet to be fully deployed. BT has, however, carried out live trials of the platform with some of its customers. Phorm's CEO, Kent Ertugrul, claims that BT will implement his company's technology by the end of the year, but BT itself remains less committed to that timeline. Both AOL and Google have vested interests in the behavioral targeting space, although not in the controversial area of deep packet inspection (DPI), in which Phorm's technology lies. AOL-owned Tacoda targets ads based on users' activity across a range of partner sites, but does not directly intercept ISP-data. Google also announced this month that it will begin testing similar behavioral targe

Amazon has opted out of Phorm's controversial targeted advertising technology, delivering a serious blow to the UK-listed company which has already prompted a European commission legal action against the British government. Phorm's technology, which is yet to be launched in the UK, allows ISPs to track their customers' activity on the internet in order to target adverts on pages they subsequently visit. Amazon's absence from Phorm's Webwise system deprives the company of the second most visited destination, after eBay.co.uk, among shopping and classified websites in the UK, according to data from Hitwise. It means Phorm will not have access to crucial information about what Amazon users are interested in. Last month the Open Rights Group, privacy campaigners, sent a letter to nine of the internet's biggest names, including Amazon, Google, Bebo, Facebook and Yahoo, asking them to opt out of Phorm's technology "to protect your users' privacy". Google and Bebo are actively considering whether to opt out and a spokesman for Amazon said the company has now removed all its domain names - including Amazon.com - from Webwise. A spokesman for Phorm said the company does not comment on individual cases but the it is understood to be planning a meeting with Amazon's management to explain the benefits of the Webwise system.

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The European Commission started legal action against Britain on Tuesday for what the EU executive called a failure to keep people's online details confidential. EU Telecoms Commissioner Viviane Reding said the action related to how Internet service providers used Phorm (PHOR.L) technology to send subscribers tailor-made advertisements based on websites visited. Reding said Internet users in Britain had complained about the way the UK applied EU rules on privacy and electronic communications that were meant to prohibit interception and surveillance without the user's consent. "Technologies like Internet behavioural advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules," Reding said in a statement. "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 the EU rules on the confidentiality of communications," Reding said. She called on Britain to change its national laws to ensure there were proper sanctions to enforce EU confidentiality rules. Unless Britain complies, Reding has the power to issue a final warning before taking the country to the 27-nation EU's top court, the European Court of Justice. If it rules in favour of the European Commission, the court can force Britain to change its laws. (Reporting by Huw Jones, editing by Dale Hudson)

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The European Commission threatened Britain with sanctions on Tuesday for allowing an Internet service provider to use a new advertising technology to track the Web movements of customers. The European telecommunications commissioner, Viviane Reding, said that use of a tracking tool created by Phorm violated European privacy laws. The country's largest service provider, BT, acknowledged last April that it used the tool without customers' consent in 2006 and 2007, Ms. Reding said. "European privacy rules are crystal clear: a person's information can only be used with their prior consent," Ms. Reding said. The case could become a test for the limits of ads that aim at online behavior. Supporters of the practice say it has the potential to transform advertising by allowing marketers to show Internet users only ads that are considered relevant to them, based on their surfing habits.

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European Union's move indicates growing government concern over how Internet companies are using individuals' private data The European Commission began legal action against the U.K. Tuesday over its failure to protect Internet users from Phorm -- a covert behavioral advertising technology tested by the U.K.'s biggest fixed line operator, BT, in 2006 and 2007. The move signals growing concern in Brussels over the way new Internet-based technologies are using people's personal data. In addition to taking legal action against the U.K., the Commission also issued a general warning to all 27 E.U. countries to uphold privacy laws, especially regarding social-networking Web sites and users of RFID (radio frequency identification) technologies. In Canada, the federal government has even proposed a legislation that will provide law enforcement agents sweeping powers to obtain user information from ISPs. The Commission, the executive body of the European Union responsible for upholding laws, said the U.K. had failed to enforce E.U. data protection and privacy rules, because broadband Internet subscribers were not informed that their browsing was being tracked.

Google, Microsoft, Yahoo support self-regulation in the UK AOL, Google, Microsoft, NebuAd, Phorm, and Yahoo promise to behave. All of these companies - along with a few others - have volunteered to honor the Internet Advertising Bureau's just-announced set of Good Practice Principles. So on to the guts of the agreement. First, companies are supposed to tell users whenever they're collecting data for the sake of behavioral advertising. They're also expected to make sure users understand what the procedure entails. Then comes the key part: users should get the chance to opt out of the collection process. Ad companies are probably hoping that users will either be too lazy to take action or will actually prefer better-targeted ads. If so, the companies will continue to make money and improve their public image. But since privacy advocates may still complain that data collection isn't an opt-in matter, the issue isn't likely to go away. Mark Howe, the country sales director of Google UK, sidestepped the mess, simply stating, "Google believes in two core principles of transparency and choice when it comes to user privacy. That is why we are supportive of these new, self-regulatory principles for online advertising which will enable consumers to increase their understanding of their web surfing options." IAB described the Principles as "the UK's first self-regulatory guidelines to set good practice for companies that collect and use data for online behavioural advertising purposes." The Principles have been approved by the Information Commissioner's Office, which reports directly to Parliament.

The Internet Advertising Bureau U.K. has today launched a good practice principles guide for firms that collect and use data for online advertising. The goal is to promote self-regulation of the practice and quell privacy concerns surrounding it. Companies that support the principles include Google, Microsoft Advertising, Platform-A, Yahoo, Specific Media, Audience Science, NebuAd, and Phorm, all of which have been involved in the formation of the principles as members of the IAB's behavioral advertising task force. To complement the guide, the IAB has also launched a consumer-facing site, youronlinechoices.co.uk, designed to educate consumers on how and why their data is being used, and to provide information on how they can opt out of the process if they wish.