After BT said it didn’t have plans to roll out the technology, Carphone Warehouse and Virgin dropped their plans too. BT cited its “commitment to developing next-generation broadband and television services”, and said it didn’t have the resources available to roll out Phorm too. So it’s not ruling it out altogether, but its a blow for Phorm, who are pouring money away without any sign of revenue being generated on a large scale, and who (now embarrassingly) announced that BT would be moving forward with the technology back in December. The FT reports that Phorm are now looking overseas for other ISPs to hop on board.

They must be wondering what went wrong. They made friends in high places, got Ofcom on board, and got shedloads of investment (with their latest £15m turning up less than a month ago). If Phorm does go down the tubes, it’ll be down to a few small but crucial errors – the testing of BT customers without their permission, their paranoid and ranting Stop Phoul Play site.

But they’ve also been hampered by the hazy general distrust from the public of anything that follows what you do online, even if it doesn’t store the information or identify you, as Phorm claim. Tim Berners-Lee was a high profile example of this lack of faith, saying: “To allow someone to snoop on your internet traffic is to allow them to put a television camera in your room, except it will tell them a whole lot more about you than the television camera”. This is quite an unfair comparison if Phorm’s technology works in the way they say it does – at no point can you be identified as you remain an anonymous number throughout the process.

But the ISPs and sites realise how much privacy means to their customers, and how toxic it would be to be thought of as untrustworthy spies – Amazon cut ties with Phorm after just one customer complaint. The resistance from the like of NoDPI and the Register has been pretty formidable too.

So it looks like a victory for the privacy campaigners, but for how long? BT still essentially have faith in targeted advertising – they didn’t postpone the rollout because of privacy issues. If Phorm manage to last long enough, they could be back, but it’s hard to shake the feeling that if it’s not them, it’ll be someone else in a few years time.

Norman Lamont, the former Tory chancellor so memorably characterised as a complete ignoramus on ITV’s Spitting Image, was yesterday announced as a non-executive director of the advertising technology firm Phorm, following a boardroom dispute that has seen three US-based directors ousted from the company.

Lamont, who is presumably enjoying the current financial crisis on account of it making Black Wednesday – which happened on his watch – look like a gentil tea party, has been drafted in by Phorm to help slime the wheels of their ongoing campaign to persuade the government that their company’s working practise doesn’t actually constitute a Big Brother-style snooping service, where users’ private web habits are recorded and monitored for the purposes of big business clients (which, funnily enough, is pretty much an exact description of what they do). In his company’s press announcement, Kent Ertugrul, Phorm’s CEO and a former seller of joyrides on Russian fighter jets, was fairly explicit about Lamont’s role:

“I welcome Lord Lamont, Kip [Meek, former executive at Ofcom], Stefan [Allesch-Taylor, co-founder of the Fairfax investment bank] and Stephen [Partridge-Hicks, MD of Gordian Knot, an investment management company] to the Board. They bring extensive experience on government, business, regulatory matters and financial markets.”

Phorm, which offers brands a targeted advertising system based on “deep packet inspection” of web browsers’ behavioural habits, needs all the help it can get, as it has come in for heavy criticism from privacy campaigners and most sane thinking citizens. One of these is Sir Tim Berners Lee, the man who founded the world wide web, who told the BBC in March, “I want to know if I look up a whole lot of books about some form of cancer that that’s not going to get to my insurance company and I’m going to find my insurance premium is going to go up by 5%.” Apart from the legal issue of privacy infringement, Berners Lee also pointed out that there’s also the question of Phorm’s collection of cookie data from web browsers, which is arguably theft; “If you want to use it for something, then you have to negotiate with me. I have to agree, I have to understand what I’m getting in return.”

ABOVE – HOW PHORM'S ADWARE SERVICE WORKS

In mid-September, the Department of Business, Enterprise and Regulatory Reform concluded that Phorm’s activities did not contravene EU laws on data protection. However, the government advised that any service would have to be “opt-in” to satisfy British law – i.e. sites using Phorm services would need to present customers with an option to exercise choice about whether they’d like to be involved.

‘Opt-in’ is a slippery term though: would anyone apart from a hardened simpleton knowingly sign up to a service that exposes their private Internet data (i.e. every site you visit and all your transactions) to multinational corporations, for free? It’s not exactly an easy sell, so presumably the questions will be massaged to some degree, assuming they are immediately visible at all. And what constitutes ‘opting-in’? Subscribing to BT or Virgin services? So far, several media companies who initially expressed an interest in Phorm’s services have backed out – including the Guardian (who stated “… our decision was in no small part down to the conversations we had internally about how this product sits with the values of our company”),  the FT, and the BBC – after their consumers expressed deep-seated anxieties, but surely not all other companies will be so scrupulous. 

The government’s Information Commisioner Office (ICO) has claimed it will closely monitor Phorm’s activities to make sure they comply with data protection laws, and the Crown Prosecution Service is currently investigating whether secret BT tests of Phorm’s adware system on customers in 2006 and 2007 breached wiretapping laws. 

Still, with Lamont’s help Phorm are hoping to achieve their stated ambition of turning their data pimping gaze on over 70% of Britain’s broadband users.