April 14, 2009

EU Sues Britain For Allowing Certain Online Ad Practices

The European Commission has launched a lawsuit against Britain for failure to protect the privacy of its citizens particularly in relation to an Internet advertising tracker known as Phorm.

Since its conception, Phorm has driven controversy. By teaming up with ISPs in the UK including Virgin Media, TalkTalk and BT, along with advertisers from other agencies, Phorm monitors the online surfing habits of users in order to "make online advertising more relevant."

As with other online advertisers, Phorm uses cookies to target ads to consumers.

The European Commission noted a large number of complaints about BT Group, which began testing Phorm's services in 2006 and 2007, although the public was not made aware of the trial.

In 2008, BT launched a new set of trials in which customers were given the ability to opt in or out. But these invitation-based trials also resulted in several complaints, the Commission said.

"Such a technology in the view of the European Commission and European data protection law can only be used with the prior consent of the user," said EU spokesman Martin Selmayr.

The European Commission issued a letter to the British government on Tuesday, stating that it must explain or modify the way it currently interprets EU rules in order to allow interception.

Britain has two months to respond to the letter, according to a spokesman from the Commission.

"Technologies like Internet behavioral advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules," said EU Telecoms Commissioner Viviane Reding.

"We have been following the Phorm case for some time and have concluded that there are problems in the way the UK has implemented parts of the EU rules on the confidentiality of communications," she added.

The European Union noted that interception is warranted only when the ISP has reasonable grounds to believe consent had been given.

"The Commission is also concerned that the UK does not have an independent national supervisory authority dealing with such interceptions," the Commission said.

"It is pleasing to see the EC is taking this issue more seriously than UK government departments here," said Nicholas Bohm, general counsel for the Foundation for Information Policy Research.

"It will in effect apply pressure to the information commissioner and the Home Office and maybe even the Crown Prosecution Service in its contemplation of the illegality of the BT trials," Bohm told BBC News.

Jim Killock, executive director of the Open Rights Group said: "There are big legal questions surrounding BT's use of Phorm, so we welcome the EU taking the government to task.

"BT should respect everyone's privacy and drop their plans to snoop on the Internet before they damage their own reputation further. Websites should protect their users and block Phorm now."


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