Phorm to Address Concerns Surrounding Privacy, U.K. Operation

U.K.-based Phorm will hold an open discussion on its Web site today, during which Chairman and CEO Kent Ertugrul will discuss concerns surrounding the company’s history, and its controversial practice of analyzing users’ Web activity in order to deliver highly targeted advertising.

Since it announced a deal with three of the U.K.’s largest ISPs last week, Phorm has faced increasing scrutiny over the privacy implications of its system and the integrity of the company itself. Phorm has deals allowing it to track behavior of people using ISP services from BT, Virgin Media, and TalkTalk.

Ertugrul acknowledged that Phorm could have been better prepared to handle consumer concerns, but said, “It’s better to correct something in hindsight than not at all.” Despite suggestions that the firm has no physical presence in the U.K., ClickZ News met Phorm’s CEO and Chairman Kent Ertugrul in the company’s central London office.

With a cautious climate currently surrounding privacy in the U.K., it comes as no surprise that a number of bloggers and consumers have been questioning how their online data is being used by companies like Phorm. U.S.-based NebuAd has similar relationships with ISPs in the U.S., and has begun ramping up its U.K. operations.

A dedicated protest site has gone live at badphorm.co.uk, and an Web page has been set up to petition the Prime Minister.

“We petition the Prime Minister to investigate the Phorm technology, and if found to breach UK or European privacy laws then ban all ISP’s from adopting it’s [sic] use,” reads the petition, which has been signed by over 1,000 people.

One of the worries raised by numerous bloggers is the company’s past involvement with adware. Phorm previously operated as 121 Media, which was responsible for a piece of adware titled PeopleOnPage, which some consider spyware. Ertugrul confirmed that Phorm was once responsible for the PeopleOnPage software.

“We realized that the product was not in line with our long term vision for the company,” he said. “We have now cut off that revenue stream completely, despite the fact that it was profitable.”

Phorm Communications Director David Sawday also explained the exact nature of the system’s opt-out policy, stating explicitly that “no data is passed on at all when a user opts-out, other than the fact that they have opted-out.” Users will be able to opt-out of the system at Webwise.com.

According to Ertugrul, consumers will be given the choice of opting out of the system via links on ads served through Phorm’s system. Phorm’s Webwise consumer data security product and Open Internet Exchange ad platform are not yet live, but he said he expects ISPs to begin using the technology within “weeks.”

Blogger Gareth Walker has discussed his concerns about Phorm’s opt-out policy and company history in detail on his Political Penguin site. Speaking with ClickZ News, he said, “There seems to be a lack of information on both the company and the system. If Phorm have cleaned up their act, then fair enough, but it doesn’t fill the consumer with confidence.”

“I wish these people talking about privacy would take the time to really look at what we’re doing” said Etugrul. “ISPs like BT would not put itself in a position where they could potentially be contravening privacy laws. We have spent so much time on due diligence, and the fact that the ISPs are working with us shows that they have confidence.”

Etugrul will conduct a live Web chat on the Webwise site today at 8.30pm GMT.