Phorm, the controversial online advertising company, has watched its share prices plummet by 40 percent as BT made announcements that they had "taken a step out of Phorm". Although BT stated they were still interested in Phorm, the news of them taking a step back dropped their share price to 270p, according to an article by the BBC.Although Phorm collects no personal data (including IP addresses), it has been criticised due to the way it stores copies of the pages a user visits, and later uses these in order to provide the user with relevant advertising.
BT, who previously carried out trials of Phorm's advertising products, has stated that the decision to put Phorm on hold was unrelated to the privacy issues that surround it, and more about "resources and priority."
Profiling is not something new – many search websites, including Google, create profiles of their users. However, the difference is that Phorm uses deep packet inspection to gather data from their users, and stores copies of the data that it gathers.
BT's decision resulted in the value of the company dropping by £35 million, according to The Press Association.
"We continue to focus considerable effort on faster moving overseas opportunities," Phorm said in a statement, mentioning that they are looking to South Korea and other markets, in order to reduce their dependency on particular countries and markets.
Since the BT trials which brought Phorm into the spotlight, several websites and ISPs have stated they will be either blocking or not using Phorm, some of which included Amazon and Orange.
To be fair, that's not difficult.
What's already on the internet isn't private. What's going on in your computer is not public information, and communications between a user and the destination site being hijacked by third parties in order to extrapolate information on the person, these are the issues. It is an issue because marketing thrives on targeting a particular demographic. If we don't yank on their reins, marketing would be as invasive as possible.
Phorm collects more information by saving the pages you visit, which can reveal a lot, especially if they're also saving form submission "preview" pages and "summary" pages, as well as web mail, etc.
People don't normally have a problem with submitting information when they decide it is beneficial and useful, but here, information is being gathered to profile a user, for purposes that they don't directly desire, and at a much higher threshold. Security problems often lead to a leak of this data, which can be used for nefarious purposes such as social engineering hacks, ID theft, and fraud.
Phorm themselves can decide to hold that data, and sell it to other companies, passing the cost on to you when you make a purchase, which is probably what's happening. Phorm can use the data in ways you don't consent to without you knowing, simply because their internal policies can have loopholes, or can be broken in secret by an insider, perhaps without trace, and employees may not be trusted directly by you. The price for a list of credit card numbers could tempt such an employee.
"The basic concept behind the Phorm architecture is that they wish to take a copy of the traffic that passes between an end-user and a website. This enables their systems to inspect what requests were made to the website and to determine what content came back from that website. An understanding of the types of websites visited is used to target adverts at particular users."
This is definitely a new level of data collection for typical advertising.
http://news.bbc.co.uk/1/hi/technology/8140368.stm
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