BT drops Phorm
BT has dropped Phorm’s targeted ad service amid claims that it needs to focus resources on “other opportunities”, including developing next-generation super-fast broadband.
However, BT’s decision to pull-out of Webwise, a controversial system that tracks the internet habits of customers to deliver targeted ads, is thought to have been affected by on-going privacy complaints.
Phorm’s technology has been the subject of much debate among privacy campaigners in recent months, causing a number of publishers to “opt-out” of the service, including Amazon and Wikipedia.
The company’s secret trial with BT in 2006 and 2007 has also 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, BT confirmed today that it will not proceed with rolling out Phorm’s technology to its 4.8 million broadband customers, saying “we don’t have any immediate plans to deploy Webwise”.
A spokesperson for BT said: “We continue to believe the interest-based advertising category offers major benefits for consumers and publishers alike. However, given our public commitment to developing next-generation broadband and television services in the UK we have decided to weigh up the balance of resources devoted to other opportunities.
“Given these commitments, we don’t have immediate plans to deploy Webwise today. However, the interest-based advertising market is extremely dynamic and we intend to monitor Phorm’s progress before finalising our plans.”
BT’s announcement is likely to have an impact on Phorm’s two other potential partners, Virgin Media and TalkTalk. Together, the three companies control around three-quarters of the UK broadband market.
Virgin Media is still understood to be interested in the concept of behavioural targeting and is in talks with a number of potential technical partners. However, reports suggest that the service provider has concerns over using Phorm’s technology.
TalkTalk has said it will keep an eye on Webise, but confirmed any implementation would have to be done on an opt-in basis, though it has no time-scale for deployment as yet.
In response to BT’s statement, Phorm said it is not “dependent on a UK model”, particularly with just one ISP.
A spokesperson said: “It is not a great surprise to us, to be honest. It has been a long process and we have never had a definitive date on a launch.”
The company has been expanding overseas in recent months and is now thought to be in discussion with potential ISP partners in 15 other countries.
It has also set up a trial of its technology with KT, South Korea’s largest ISP, and is expected to announce another overseas deal in the coming weeks.
However, BT’s announcement is bound to fuel more speculation over whether Phorm can continue running.
Last month, the company’s share price dropped 27.5p following its announcement of a pre-tax loss of $48 million for the year ending December 31 2008 (see Phorm’s pre-tax loss reaches $48m).
A week prior to its results announcement, Phorm unveiled plans to sell a 19.4% stake through a new share offering in a bid to raise £15 million, in order to continue its trials with BT, TalkTalk and Virgin Media.
The company has failed to bank any significant revenue from its trials so far – in 2007 Phorm spent $22.4 million and reported a $32.8 million loss.