TalkTalk ends agreement with Phorm
TalkTalk has become the second internet service provider to drop targeted ad service Phorm this week.
The loss of two of its key partners, which just leaves Virgin Media as a potential triallist of its controversial tracking technology Webwise, has seen Phorm’s shares plummet by more than 50%.
Phorm released a statement announcing TalkTalk’s decision to terminate its agreement with the company earlier today, although its plans were not as advanced as BT’s.
“The directors note that this relationship had not extended to any form of trial in contrast to BT and some international internet service providers,” the statement said.
Phorm also confirmed that “privacy was not a factor” in BT’s decision to pull out of its Webwise launch, despite rumours to the contrary.
The statement suggested that Virgin Media is still reviewing its interest in Webwise, though some reports claim that Virgin has concerns over using the technology.
Webwise, a system that tracks the internet habits of customers to deliver targeted ads, has been the subject of several privacy complaints in recent years.
Phorm’s ‘secret’ Webwise trial with BT in 2006 and 2007 has become the basis of a European Commission investigation into the UK government’s failure to protect online users.
Last year, BT decided to carry out a new invitation-based consumer trial of Webwise, despite complaints about the system and the way it was deployed without users’ consent the first time round.
However, two days ago BT said it wasn’t planning to launch Webwise anytime soon as it wants to focus on “other opportunities”, such as developing super-fast next-generation broadband and television services across the UK (see BT drops Phorm).
BT’s announcement was bound to put the spotlight on TalkTalk and Virgin Media (who together with BT control around three-quarters of the UK broadband market), and many reports will have preempted TalkTalk’s decision to follow BT.
On Monday, Phorm said BT’s plans to pull out of Webwise didn’t come as a surprise and claimed it is not dependent on a UK model with just one ISP.
The company is in discussions with potential ISP partners in 15 other countries and has set up a trial of its technology with KT, South Korea’s largest ISP.
However, Phorm’s shares slipped by a significant 40% on Monday as the industry caught wind of BT’s statement and the ad company’s shares have dropped even further today, which is likely to fuel more speculation over whether Phorm can continue running.
Losing BT and TalkTalk is the latest in a long series of setbacks for the company, which reported a pre-tax loss of $48 million for the year ending December 31 2008 (see Phorm’s pre-tax loss reaches $48m).