Online tracking firm Phorm sees losses double

Phorm, the online advertising service accused of illegally tracking individuals' web-browsing histories in order to target marketing, announced annual losses of $32.8m (£16.6m) yesterday.

The AIM-listed company recently signed partnerships with BT, Talk Talk and Virgin Media – which between them represent 70 per cent of internet service provision market. A row blew up earlier this month when a think-tank branded the company's activities as intrusive, and in contravention of laws that require users' consent before web traffic data can be used.

Phorm had proposed an "opt out" system under which the ISPs' customers would have to request to be exempt. But the UK data watchdog said this week that the system must be "opt in".

The company's losses were more than double the $11.6m recorded the previous year.

But it says that they reflect planned investments in infrastructure, people and technology, and that implementation of the major ISP contracts is on track. Phorm is in talks with a number of other ISPs, both in the UK and internationally, and raised a further $65m of equity in early March, said Kent Ertugrul, the chief executive.

"In these current times of uncertainty in the financial markets, the fact that we were able to raise significant funds is testament to the strength and potential of our business model," he said.

Mr Ertugrul is keen to emphasise that Phorm's service will not store any information that can be used to identify a user, that all participants will have the option to turn it off, and that the technology complies with all data protection and privacy laws.

But Richard Clayton, the treasurer of the Foundation for Information Policy Research, wrote in an open letter last week: "The Phorm system is highly intrusive - it's like the Post Office opening all my letters to see what I'm interested in, merely so that I can be sent a better class of junk mail."

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