July 7, 2009

Shares Plummet After BT Drops Phorm

Shares in Internet tracking provider Phorm took a beating on Tuesday following an announcement by BT PLC on Monday that the UK-based telecom firm would not be using Phorm's advertising services.

Shares in Phorm fell 40 percent just after BT's announcement was made on Monday. Shares fell 4.4 percent during morning trading on London's AIM Market at 270 pence, according to the Associated Press.

"We continue to believe the interest-based advertising category offers major benefits for consumers and publishers alike," BT said in a statement. "However, given our public commitment to developing next-generation broadband and television services in the UK, we have decided to weigh up the balance of resources devoted to other opportunities."

In the past, Phorm has teamed up with various ISPs in the UK, including Virgin Media, TalkTalk and BT. The company offers its Webwise system to advertising firms. The Webwise system tracks the surfing habits of individual users in order to make ads more relevant.

The system has become highly controversial and critics have included Tim Berners-Lee, known as the father of the Internet.

"To allow someone to snoop on your internet traffic is to allow them to put a television camera in your room, except it will tell them a whole lot more about you than the television camera," Berners-Lee said in March.

Phorm claims its system allows users to opt in or out of the program, and that it does not store browsing history or IP addresses.

"In addition to making excellent progress in South Korea, we are engaged in more than 15 markets worldwide including advanced negotiations with several major ISPs," Phorm said in a statement on Monday.

In the US, a firm known as NebuAd Inc was aiming to offer services similar to Phorm's. However, over the course of one year, each of its partners and customers, including Charter Communications Inc., Bresnan Communications LLC, The Washington Post Co.'s Cable One Inc. and Embarq Corp dropped out, resulting in the Redwood City, California company's failure.


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