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UK: Use of Web Tracking Tool Raises Privacy Issue in Britain

by Kevin J. O'BrienNew York Times
April 14th, 2009

The European Commission threatened Britain with sanctions on Tuesday for allowing an Internet service provider to use a new advertising technology to track the Web movements of customers.

The European telecommunications commissioner, Viviane Reding, said that use of a tracking tool created by Phorm violated European privacy laws. The country’s largest service provider, BT, acknowledged last April that it used the tool without customers’ consent in 2006 and 2007, Ms. Reding said.

“European privacy rules are crystal clear: a person’s information can only be used with their prior consent,” Ms. Reding said.

The case could become a test for the limits of ads that aim at online behavior. Supporters of the practice say it has the potential to transform advertising by allowing marketers to show Internet users only ads that are considered relevant to them, based on their surfing habits.

But the technique has come under scrutiny because of concern that personal privacy could be violated as companies seek more specific data on individual users. In the United States, lawmakers in both houses held hearings last fall on targeted advertising. Although no legislation came out of the deliberations, one broadband operator, Charter Communications of St. Louis, dropped plans to conduct a test of behavioral advertising technology after receiving protests.

The British government has resisted calls for tighter oversight and has supported voluntary efforts by industry to monitor how user data is collected. This month, the Internet Advertising Bureau, a trade association for Internet marketers in Britain, asked its members to sign a voluntary code of conduct stating that no Web data would be collected without a user’s explicit consent.

The initiative was endorsed by Ed Richards, the head of the British telecommunications regulator, OfCom.

After investigating complaints about BT’s use of Phorm, the British information commissioner, Richard Thomas, concluded that Phorm’s technology, which relies on anonymous cookies and tracking of individual Web movements, had adequately eliminated ties to individual users. BT held another trial of Phorm’s technology from October through December using volunteers.

Many companies involved in Internet advertising, including Google and other social networking services, use behavioral targeting. But because Phorm receives actual Web-use records from service providers, it says its technology is more accurate.

An Internet association that has led the protest against Phorm in Britain, Open Rights Group in London, said the government had ignored European law to accommodate businesses interested in developing lucrative Internet advertising models.

“What the U.K. government has done is lackeyed up to business and as a result we’ve been breaking E.U. law and now have this infraction proceeding as a result,” the executive director of the Open Rights Group, Jim Killock, said.

Ms. Reding threatened to take Britain to court if the government did not step in and enforce European law. A spokeswoman for the Department for Business, who did not want to be identified, confirmed that the government had received the notice from Brussels and would respond after analyzing the issue.

Ms. Reding also called for stronger action by social networking services to protect the privacy of minors.

Under the action announced Tuesday, the commission is threatening to begin an “infringement proceeding” against Britain, accusing it of failing to observe European privacy law.

A spokesman for Phorm, Justin Griffiths, said the company felt it was being made an example in a broader regulatory struggle between Britain and the commission.

“Phorm is very confident that it is compliant with the relevant U.K. laws and E.U. directives,” Mr. Griffiths said.

Simon Davies, the director of Privacy International in London, said the case against Britain over Phorm was a broader test of the unclear legal landscape regarding a technique that allows companies to track the identity and Web habits of individual computers, traced by their unique Internet Protocol addresses.

“The E.U. has been attempting to require the U.K. government to produce a definitive statement on behavioral advertising for more than a year,” Mr. Davies said. “But the U.K. government has refused to do that and now we have a total breakdown of regulatory oversight and the result is intransigence on the part of Britain."



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