Phorm shares nosedive after BT withdraws Webwise deployment

The controversial Phorm, has again hit the headlines. The tragedy fell on the software developer, when its biggest client, BT has announced its decision to shelve its plans to use the spy software or technology developed by Phorm to track the millions of broadband customers in the UK for the purpose of advertising. Today, the shares of Phorm plunged 30 percent to 310p as the announcment from the UK’s largest broadband provider sent shock waves among the investors.

The technology developed by Phorm will enable the internet service providers to track their customers while they browse thus facilitating the targeted advertisements to reach the millions of broadband customers. Providers can generate as much as 100 times more revenue by using this technology, it is said. However, many privacy groups came with strong protests against BT and other UK internet providers who signed deal with Phorm. Earlier, the UK cable broadband ISP, Virgin Media indicated that it has little interest to use this controversial technology on its customers, though it has signed a pact with Phorm.

Phorm has developed Open Internet Exchange (OIX) which can store and analyse the page visits of a particular user to make up a user’s profile. Once profile is made, the OIX will send targetted advertisments to user’s screen based on the user’s profile.

Last year, BT was said to have put this technology in trial targeting more than 36000 broadband customers in the UK. As a result, the privacy groups raised campaigns against Phorm eventually leading to probe by the Information Commissioner.

However, BT says it had to shelve its plans to deploy Phorm due to the ongoing financial constraints.

Times Online reports a spokesman for BT as saying:

“We continue to believe the interest based advertising category offers major benefits for consumers and publishers alike. 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.”

“Given these resource commitment we don’t have immediate plans to deploy Webwise today”

Meanwhile, the Phorm says it is hopeful that it can ‘create the conditions necessary for UK ISPs to move to deployment’. The company is said to be eyeing overseas opportunities as it is ‘engaged in more than 15 markets worldwide.’