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Denied secret relationship with Phorm, blamed malware

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Deus ex machina

Phorm confirmed that the domain was one of the addresses it was using to collect browsing data. The company told Stephen to contact his ISP if he had a problem with it, but refused to confirm or deny it any relationship with BT. Indeed, a couple of months earlier, Phorm had been prompted to release an official denial that it had a deal with BT to the Alternative Investment Market, in response to persistent rumours that were moving its share price.

BT support stuck firmly to the line that the dns.sysip.net lookups were nothing to do with it, despite further tests Stephen had carried out with a brand new computer. The firm's response, via emails, was: "sysip.net is a DNS hijacker, similar to a malware therefore your anti virus scan would not have picked this up." After many calls and emails, finally it conceded "an issue which affected some users that week".

That was when The Register got involved. We contacted the BT press office in July last year, and were issued with a firm denial that its DNS servers were compromised. Likewise BT had no involvement with 121Media/Phorm, we were assured. The trail went cold.

Come Valentine's Day 2008, the major data sales deal between the pair is announced. Analysts estimate the new revenue stream will be worth £85m to BT in 2010, without the firm having to enhance its service to consumers in any way. Don't worry about privacy, BT tells us - it "has carried out extensive commercial, legal and technical due diligence on Phorm".

Remember that in summer last year, at least as far as BT support were concerned, Phorm's technology was "malware". Now BT is "confident that customer confidentiality and security is wholly protected".

We contacted BT early yesterday morning to ask for an explanation, but it has yet to respond. A spokesman says it is "looking into" the events we describe above. We'll update this story if he comes back to us.

An angry Stephen told us following our first Phorm story on Monday: "I'm very disappointed with this. It caused me sleepless nights as I had initially assumed I had some new super Trojan which was undetectable.

"If only BT or Phorm had put their hands up and said that they were using a sample of users as guinea pigs it would have saved me and my business a lot of time and money."

There's no word yet on when BT will draft the rest of its broadband customers into the new targeting system. Phorm chief executive Kent Ertegrul has claimed he is in talks with every UK ISP and in early stages of attacking the US market.

Phorm was unavailable for comment today. ®

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