Page last updated at 10:44 GMT, Monday, 6 July 2009 11:44 UK

Phorm shares fall as BT opts out

Phorm is a controversial system of internet advertising

Shares in the online ad firm Phorm have fallen by more than 40% after BT said it had no immediate plans to use the service that tracks online behaviour.

Phorm serves up adverts related to a user's web browsing history, which it monitors by taking a copy of the places they go and search terms they look for.

However, it came in for considerable criticism from privacy groups and prompted an EU investigation.

The firm's shares were down 43.16% at 270p at 13:13 BST.

Phorm builds a profile of users by scanning for keywords on websites visited and then assigns relevant ads.

It has proved controversial because it scans almost all sites a user visits and there is an ongoing political debate about how a user gives consent.

Phorm had conducted trials of its technology with BT, which it marketed as Webwise.

On hold

A spokesman for British Telecom, Mike Jarvis, told the BBC that they were not completely closing the door on Phorm's Webwise service.

"We're interested in this area [targeted online advertising] but for now we have no immediate plans.

"It's more a case that we have other stuff to work on - Project Canvas, rolling out the fibre network and so forth - so we've taken a step out of Phorm and will see how it develops.

"[Our decision has] nothing to do with cost or privacy, it's about resources and priority," he added.

In April, Amazon blocked Phorm from scanning its web pages to produce targeted advertising, as has the UK government, citing privacy concerns.

Phorm declined an interview request, instead issuing a statement saying its activities "remain ongoing" and that it was looking forward " to creating the conditions necessary for UK ISPs to move to deployment".

"We continue to focus considerable effort on faster moving overseas opportunities," the statement read.

"In so doing we have already minimised our dependency on the deployment by any single ISP or in any particular market.

"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."

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