The European Commission has claimed that there are problems in the UK's implementation of EU rules on the confidentiality of communications.
Complaints have been made to the EC over how the online advertising technology service was tested on BT's broadband network without the consent of users. The EC has claimed that Phorm ‘intercepted' user data without clear consent and the UK need to look again at its online privacy laws.
The EU's commissioner fir information society and media Viviane Reding, told the BBC that the EC wanted the UK to ensure there were procedures in place to ensure ‘clear consent from the user that his or her private data is being used'.
Reding said in a statement: “Technologies like internet behavioural advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules.
“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 the EU rules on the confidentiality of communications.”
Reding claimed that the UK needed to change its national laws to ensure there were proper sanctions to enforce EU confidentiality rules, and unless the UK complies, the EU has the power to issue a final warning before taking the country to the 27-nation EU's top court, the European Court of Justice. If it rules in favour of the European Commission, the court can force Britain to change its laws.
Phorm said in a statement that its technology was ‘fully compliant with UK legislation and relevant EU directives', and added that it did not believe the Commission's legal action would have ‘any impact on the company's plans going forwards'.
BT told the BBC that it had tested Phorm's technology on its network with thousands of customers without asking for their consent or informing them of the trials. It later carried out further trials of the service, which it markets as Webwise, with the consent of users. BT and Phorm have previously said they sought legal advice before carrying out the first trials.