News that the Office Of Fair Trading has announced an investigation into advertising and pricing practices on the internet has hit Phorm’s already dropping share price, reports The Guardian. It appears that as much as 20% dropped off this morning.
Google Finance shows the Phorm share price at 98p (clickable thumbnail)
The Guardian article claims that
Similarly a government investigation, by the Department for Business, Enterprise and Regulatory Reform – now Business, Innovation and Skills – reached the conclusion that Phorm did not breach European laws on data protection.
This claim is not true. A Freedom Of Information response from BERR confirms this is not the case:
Perhaps The Guardian has been confused by the various attempts at PR and spin from Phorm. The above FOI link should put them straight.
Some people may be wondering what all the fuss is about. Simply put Phorm is a company with a history of adware/spyware which wants to use Deep Packet Inspection technology to record all an ISP’s users’ internet activity to force feed them adverts.
Use of DPI technology for non-judicial purposes is illegal, as is not obtaining explicit informed consent from users. Despite UK and EU law being clear on these matters the UK “government” failed to enforce the law against BT when it undertook a number of tests, some secret and one announced (but still illegal in my understanding). The EU has taken the UK “government” to court for its failure to enforce the law correctly.
A number of organisations have refused permission for Phorm to profile their websites including LiveJournal, Wikipedia, Amazon and the Nationwide Building Society. Orange and The Guardian have ended their association with Phorm citing ethical concerns.
Recently BT and Carphone Warehouse dropped plans to implement Phorm. As they were two of the three ISPs responsible for giving support to this scheme in the first place that has to be seen as a near mortal wound.
The campaign against DPI based advertising has come about almost entirely from the techie sector. Phorm has claimed the campaign against DPI based advertising is the work of a few serial letter writers, luddites and competitors and launched a smear campaign of its own.
I have openly challenged Kent Ertugrul, Phorm CEO to publish a verifiable legal opinion confirming his product’s compliance with UK and EU law. Over a year later I am still waiting for his response. I have written a lot about Phorm here. And will continue to.
Phorm’s share price has fallen from 3505p on February 25th 2008 to 98p at end of business today.