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Last updated on April 18, 2014 at 21:21 EDT

Controversial NebuAd Closes Its Doors For Good

May 21, 2009

Internet ad company NebuAd Inc has shut down after facing opposition to some of its methods of gathering information.

The Redwood City, California-based ad firm is known for being involved in questionable tactics of gathering information on Web users’ surfing patterns.

The company’s behavioral targeting advertising system was intended to track Web traffic so that ads could be made relevant to the interests of individual surfers.

But Web subscribers failed to see NebuAd’s tactics in the same light as the company did. NebuAd once had signed up more than 30 Internet providers to use its services, but users answered with a lawsuit demanding more than $5 million in damages and a request to turn the case into a class action representing tens of thousands of Internet subscribers.

The public outrage caused many ISPs, including Charter Communications Inc., Bresnan Communications LLC, The Washington Post Co.’s Cable One Inc. and Embarq Corp to drop NebuAd altogether.

In September, NebuAd housed more than 60 people, but in July and August most of its employees were cut.

NebuAd has “essentially ceased to exist,” according to documents filed with the U.S. District Court for the Northern District of California and cited by the Associated Press.

British firm Phorm Inc is facing similar problems with consumer concerns over privacy. The company has deals with three Internet access providers that account for about 70 percent of Britain’s broadband market, said the AP. Those partners are BT Group PLC, Virgin Media Inc. (VMED) and Carphone Warehouse Group PLC’s TalkTalk.

Phorm spokesman Justin Griffiths said the company is retaining its partners, but Richard Clayton from Internet think tank Foundation for Information Policy Research in Cambridge, England, said potential partners may be irked by the company’s services.

“I haven’t seen any other ISPs queuing up to associate themselves with Phorm at all,” he said.

“A number of smaller ones have said they won’t go anywhere near it.”