British Telecom sacks bitterly unpopular Phorm ad platform

In an announcement this morning, British Telecom said it has decided to halt BT Webwise, its prospective targeted advertising platform, calling the move a cost-cutting measure as the company invests £1.5 billion in improved broadband deployments. As a result, shares in the BT, TalkTalk and Virgin Media joint Venture plummeted in value by some 40%.

In early 2008, BT, TalkTalk, and Virgin Media joined forces to build a single targeted ad platform for their respective subscribers. The service would provide the ISPs anonymized user search data so they could serve more appropriate advertisements. Unfortunately, after the service had been announced, BT admitted that it had already tested the service without telling users. This was naturally met with petitions and protest from angered users and privacy advocacy groups.

BT continued to test the service on an opt-in basis under the name "BT Webwise," but the public held a degree of skepticism about the platform's impact on privacy, which European Commission policymakers shared. By the time the second battery of tests rolled around, the EC had begun an investigation into the UK data protection laws which allowed the original Phorm tests to be conducted without customers' consent.

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In her public address in April, European Commissioner Viviane Reding said, "European privacy rules are crystal clear: A person's information can only be used with their prior consent. We cannot give up this basic principle, and have all our exchanges monitored, surveyed and stored in exchange for a promise of 'more relevant' advertising! I will not shy away from taking action where an EU country falls short of this duty."

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