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EU Presses UK Over Online Advertising System

The European Commission is putting further pressure on the U.K. to respond to privacy concerns related to Webwise, a behavioral online advertising system being evaluated by U.K. ISPs.

The Commission is awaiting a response to a third letter sent to the government at the end of January, according to Martin Selmayr, spokesman for Viviane Reding, Europe's telecommunications commissioner. The Commission hasn't revealed the content of the letter.

The latest query comes after the Commission was unsatisfied with responses to two previous letters, sent in July and October of 2008. The Commission also sent a sharp warning.

"The Commission is asking that the U.K. ensure it is complying with E.U. law," according to a statement released by Selmayr's office. "The Commission may have to proceed to formal action if the U.K. authorities do not provide a satisfactory response to the Commission's concerns on the implementation of European law in the context of the Phorm case."

Webwise is a product of the company Phorm. It's implemented by Internet service providers and monitors a person's Web browsing and search terms in order to deliver targeted advertising based on a person's interests.

Phorm contends Webwise anonymizes sensitive data and does not collect or store any personally identifiable information. Phorm says the system lets advertisers reach more receptive customers as well as generate a new revenue stream for ISPs.

But activists have concerns over how the system impacts people's privacy.

Phorm took much heat after it was revealed BT conducted trials of the system without people's consent in 2006 and 2007. A few savvy BT customers noticed technical irregularities when they were browsing the Internet, which brought the Webwise system much press attention.

BT's secret trials could have potentially violated the U.K.'s Data Protection Act, which mandates that personal data can't be processed without consent. The trials could have also conflicted with the Regulation of Investigatory Powers Act of 2000, which makes it illegal to monitor communication between two entities without proper consent.

The Crown Prosecution Service is currently looking into those secret trials, but has not made a decision on whether to prosecute.

BT concluded another Webwise trial in December, where around 10,000 users were given the option of whether they wanted to participate. BT plans on rolling out Webwise at some point but has not set a date, a BT spokesman said Thursday. BT is still reviewing the results from the technical trial, he said.

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