Advertisement serving company Phorm has defended its controversial technology at an unprecedented "town hall meeting" in London on Tuesday.
Phorm's technology is controversial because it tracks web browsing behaviour to determine which advertisements to send to the owner's browser. Critics say this is an invasion of their privacy, and that use of the technology may break several laws.
Critics, led by Cambridge University's Richard Clayton and writer Alexander Hanff, charged Phorm with breaking several laws, including the Regulation of Investigatory Powers Act (RIPA), the Fraud Act and others, including European law on data privacy and protection.
Clayton, who has had an in-depth look at Phorm's processes, praised the firm for the way it dealt with data protection issues. However, he objected to Phorm's ability to deliver advertisements to his browser. He said information about his surfing behaviour was private data, and that Phorm's tracking infringed that privacy.
Several critics from the floor questioned the way in which Phorm's customers - internet service providers BT Webwise, TalkTalk and Virgin Media - would alert their customers to the fact that Phorm would track their browsing habits and obtain their consent. On balance, they wanted internet customers to be opted out by default. TalkTalk is on record as taking this position.
Critics were concerned that Phorm planned to assume that website owners gave their consent for Phorm to index keywords on their pages. Phorm's senior vice-president for technology, Marc Burgress, said Phorm checked webpages for code called robot.txt, which tells search-engine spiders whether they are allowed to index the page. If Google was allowed to, Phorm assumed it had tacit permission to do so too, Burgess said.
Delegates questioned Phorm's history, alleging that the firm had written spyware. They were also distressed that BT had tested Phorm's technology in secret trials that involved tens of thousands of customers without their knowledge or consent.
Phorm CEO Kent Ertegrul gave a spirited defence. He showed how Phorm destroys any link between a user's IP address and subsequent surfing history. This plus aggregation of tracking histories to a minimum of 5,000 made it impossible to identify an individual user, he said. This was unique among search engines, he claimed.
He noted that other search engines, notably Google, collect and store a user's IP address, all searches, their click-stream and registration data. No critic at the meeting objected publically to this.
Ertegrul noted that it was very hard for users to opt out of other search engines' consent scheme. Phorm was suggesting ISPs ask for an explicit consent agreement when users connect for the first time, and run recurrent reminders in banner ads that users were opted in and could opt out at any time.
He said Phorm retained no user data whereas other search engine companies kept it for 13 to 24 months. Users could also delete the Phorm opt-in cookie at any time, and this would break all links to the browser's previous surfing history, he said. Ertegrul invited anyone to go through Phorm's software at any time to check if it was living up to its claims.
Moving on to the offensive, Ertegrul said Phorm offered a way to preserve competition in many aspects of the internet. "It is all about choice," he said.
All website owners, and even bloggers, had a chance to make money from advertising, he said. This would preserve a diversity of media voices that would be lost if internet advertising continued to be dominated by Google, Microsoft and Yahoo, which only large media groups would be able to afford.
It would also provide ISPs with a revenue stream at a time when margins were shrinking. This would preserve a competitive market in access to the internet, he said.
He said Phorm would ensure that users received advertising that related to their interests, thus relieving them of unwanted ads and junk e-mail. This would make surfing a better experience, he said. It was comparable to being exposed to advertising by buying a special interest magazine, he said.
He said Phorm had been at pains to ensure that its technology and procedures were legal. It had already presented to the Home Office, the Information Commissioner's Office and Ofcom, none of which had raised objections. It was now canvassing European regulators to ensure conformity with local restrictions.
A source close to Phorm confided after the meeting that they had tried to raise MPs' interest in Phorm and internet privacy, and had been rebuffed.
With respect to assertions that the public did not want its privacy invaded by the likes of Phorm, Ertegrul said consumer research and focus groups had shown consumers were neutral but would like the option to cancel any consent agreement at any time.
The US Federal Trade Commission explored the issue of targetted advertsing based on user's behaviour late last year in response to Google's acquisition of DoubleClick. It later issued guidelines for the self-regulation of the industry.
A Datamonitor report published today reveals that television broadcasters are likely to adopt targeted advertising for TV programmes delivered via digital cable and over broadband links. Datamonitor analyst Chris Khouri said consumers now have a much wider choice of media. "This has led to a much more fragmented marketplace, which makes it hard for advertisiers to reach their audiences cost-effectively. This was why they are so interested in behaviourally targetted advertising and ways to get their ads in front of known receptive audiences."
The meeting was set up by 80/20 Thinking, the consulting arm of privacy campaigner Privacy International. 80/20 Thinking is advising Phorm on how to be more transparent in its dealings with the public and is preparing a privacy impact assessment of Phorm's technology.