EC to Sue UK Government Over Phorm Complaints

The European Commission has launched legal action against the UK Government, over its failure to force behavioural ad technology firm Phorm to comply with EU data protection and privacy rules.

In April last year, phone giant BT admitted that it had used business customers' data without permission, in a trial run for Phorm's 'Webwise' technology in 2006 and 2007. This technology analyses users' web surfing habits to determine their interests and then delivers targeted advertising to them. The trial resulted in a number of complaints to the Information Commissioner's Office and to the UK police.

The UK Government has two months to respond to the letter of formal notice sent by the European Commission today. If it fails to address the problems outlined in the letter, the Commission will then issue a 'reasoned opinion' - the final stage before taking the UK Government to the European Court of Justice.

'We have been following the Phorm case for some time and have concluded that there are problems in the way the UK has implemented parts of EU rules on the confidentiality of communications,' stated Viviane Reding, the EU's Telecom Commissioner. 'I call on the UK authorities to change their national laws and ensure that national authorities are duly empowered.'

This, she said, should also help reassure UK consumers about their privacy and data protection while surfing the Internet.

In a video posted on her web site this morning, Reding said that Europeans must have the right to control how their personal information is used, and that the Commission would take action wherever EU Member States failed to ensure that new technologies respected this right.

Phorm has issued a statement in response to the announcement, saying that its technology is fully compliant with UK legislation and relevant EU directives. 'Our system stands out from other online advertising systems in that it does not store personal data, or browsing histories,' the company said. 'Consistent with UK and EU legislation, and in anticipation of any changes that may be made to the law in the future, our system offers un-missable notice and clear and persistent choice to consumers.'

In addition to taking legal action against the UK, the European Commission also issued a warning to all 27 EU countries to uphold privacy laws; especially regarding social networking web sites and the use of RFID (radio frequency identification) technologies.

Earlier this month, The European Union's Consumer Affairs Commissioner Meglena Kuneva accused the online ad industry of neglecting to make opt-out systems transparent and easy-to-follow, and called on the industry to produce its own set of voluntary guidelines to protect consumer and privacy rights.