Amazon opts out of Phorm's targeted internet advertising system after privacy fears

Amazon has opted out of Phorm's controversial targeted advertising technology, delivering a serious blow to the UK-listed company which has already prompted a European commission legal action against the British government. Phorm's technology, which is yet to be launched in the UK, allows ISPs to track their customers' activity on the internet in order to target adverts on pages they subsequently visit.

Amazon's absence from Phorm's Webwise system deprives the company of the second most visited destination, after, among shopping and classified websites in the UK, according to data from Hitwise. It means Phorm will not have access to crucial information about what Amazon users are interested in.

Last month the Open Rights Group, privacy campaigners, sent a letter to nine of the internet's biggest names, including Amazon, Google, Bebo, Facebook and Yahoo, asking them to opt out of Phorm's technology "to protect your users' privacy".

Google and Bebo are actively considering whether to opt out and a spokesman for Amazon said the company has now removed all its domain names - including - from Webwise. A spokesman for Phorm said the company does not comment on individual cases but the it is understood to be planning a meeting with Amazon's management to explain the benefits of the Webwise system.

But it is the latest blow to a company whose online tracking technology has infuriated privacy campaigners and is now worrying EU lawmakers. On Tuesday, the EC launched legal proceedings against the government for breaching data protection and ePrivacy rules as a result of secret testing of Phorm's technology by BT in 2006 and 2007. The commission wants the rules covering interception of online traffic to be tightened. Viviane Reding, the EU telecoms commissioner, made it plain that she is becoming increasingly concerned about advertising that is based on the collection of details of a user's online behaviour.

"Do you want to turn the internet into a jungle? This could happen if we cannot control the use of our information online," she said. "There is an undeniable risk that privacy is being lost to the brave new world of intrusive technologies."

The sheer amount of negative press surrounding Phorm's technology has left its creators with a challenge. It needs users to sign up for the service in order for it to work, but a survey of 1,000 British internet users by research specialist TNS showed that there is resistance to targeted advertising among surfers. Although 47% of people liked the idea of having ads tailored to their tastes, 41% still saw targeted advertising as an abuse of their privacy.

To persuade people to sign up Phorm is looking at the possibility of incentives for users. They could be offered cheaper deals, faster speeds or charitable donations made by their internet service provider (ISP) to encourage them to sign up.

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