Phorm tracks individuals browsing in order to serve highly targeted ads. Phorm has received criticism from the European Commission for the way ISPs use it in the UK. The EU is currently considering legal action against the UK over the use of Phorm.

Amazon spokesman Craig Berman did not give an explanation about the move. "All we’re saying is we’ve chosen to opt out," he said. "I don’t know if they’ve even implemented anything yet."

Phorm said in a statement "There is a process in place to allow publishers to contact Phorm and opt out of the system, but we do not comment on individual cases."

Digital advocacy organization the Open Rights Group welcomed the move by Amazon and other companies. "By choosing to block the contentious online advertising system from scanning its web pages, these firms have taken the positive choice to protect users’ privacy and their own brands," it said on its Web site.

"We expect more sites to block Webwise in the near future and also ISPs to drop plans to snoop on web users."
 

Did BT illegally test a new online advertising system on their customers without consent? That’s currently what British prosecutors are trying to determine.

All the fuss stems from a document that was leaked back in June which showed that BT had held a two-week test, which involved 18,000 subscribers back in September and October 2006 without them knowing.

The prosecutors are looking into Webwise, an advertising system from the company Phorm, which is a monitoring service that drops a cookie in order to track an individuals Internet activity.

The cookie contains a simple user ID, which is tied to certain categories such as “laptops” or “cellphones”, using this information Phorm is able to display “relevant” advertisements.

It’s unknown at this time if the secret trials by BT violated the Regulation of Investigatory Powers Act of 2000, which makes it illegal to monitor the communication between two parties without consent.

Even if it’s found that BT did nothing legally wrong, what about ethically?

Those responsible for editing negative material out of Phorm’s Wikipedia entry did the company’s public relations staff no favors. People who expunge unseemly but accurate information out of their entries tend to cause themselves even more grief.

The Phorm edits ended up being caught by critics of the company. A report at The Register said these edits replaced criticisms of Phorm with “more ‘on message’ PR-type statements.”

Another article from The Register noted Phorm’s admission it had made changes to the Wikipedia entry, as their PR staff were unaware of Wikipedia’s numerous rules that cover conflicts of interest and other aspects of editing Wikipedia.

Phorm’s service works with ISPs and tracks the behavior of the ISP’s customers. It then serves advertising based on the perceived interests of the person browsing the web.

Advocates of the approach see it as a way to bring relevant ad content to people while generating revenue for the ISP. Opponents in Britain question the targeting practices of Phorm, and have little use for the company’s claims it will protect privacy of Internet users.

These three corporations are fairly huge in the UK, and Phorm indicates that its platform, the Open Internet Exchange (OIX), should lead to everyone receiving more money and fewer complaints.

"The OIX is a marketplace serving campaigns on the most productive inventory for advertisers and helping online publishers increase the value of their websites," according to a statement.  "It will also revolutionise current standards of online privacy and fully protect the identity of consumers."

We’re inclined to believe Phorm, at least on that second front, as it had Ernst & Young take a look at OIX’s privacy aspects.  Also, in another development that should boost onlookers’ confidence, FT.com, Universal McCann, and iVillage all signed up for the launch (though that last entity isn’t doing so well).

OIX’s ability to work well with Virgin Media, BT, and TalkTalk remains to be seen.  But Phorm seems to have succeeded in establishing its own united federation of ISPs, and that’s an impressive start.