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Phorm: How it went down

What could possibly go wrong?

Internet Security Threat Report 2014

Multiple sources have told The Register throughout that the hit to BT's reputation caused by the Phorm controversy made Retail quite unpopular with other divisions.

So BT and Phorm's clumsy attempt to apply lipstick to their latest news pig - a consistent failing of the disastrous PR efforts surrounding the whole project - on a basic level either backfired or should've been dismissed.

On a more sophisticated level, however, the truth of BT and Phorm's separation is unlikely to be a simple capitulation to consumer concerns. It's a convenient and familiar narrative for journalists, but unsatisfactory given the determined personalities and powerful interests involved.

We've heard testimony this week from BT insiders that a good deal of the silence and delays on the Phorm project was a result of engineering problems, not concern for customer privacy. Put simply, the system could not be made to work. Despite Phorm's claims soon after its launch that it could process and categorise user traffic on the fly, testing in the real world said otherwise, one source revealed. Significant slowdown was measured when the deep packet inspection probes were switched on.

This problem sent Phorm back to the drawing board, to return with an "offline" version of its system, which would analyse a copy of each user's data stream. it's unknown whether this approach was successful.

As well as technical problems, our sources report continual internal debate over the legal status of the technology, contrary to public statements. Towards the end, we're told, a great deal of effort was made by BT lawyers to draw up a contract that would insulate it from any liability if website owners or consumers were to mount a legal attack.

Indeed, a large chunk of the tens of millions of pounds raised by Phorm has ended in the pockets of pricey corporate lawyers.

This reporter ran into Phorm CEO Kent Ertugrul at a party held at the offices of one such firm of pricey corporate lawyers in May last year. It was the second time we had met. The first was in the early days of the story, when he gave us this interview.

Our most recent encounter was at the Palace of Westminster, when Ertugrul angrily brandished a print out of the cookies dropped on readers by The Register. That was moments before he tried to shout down Sir Tim Berners-Lee, the Greatest Living Briton™, across a parliamentary committee room.

Journalist colleagues and industry figures we've spoken to agree he's a difficult man to like. According to people with direct knowledge, Ertugrul is a difficult man to work with, too.

The Register has spoken to some who worked for Phorm. Around the time of the pre-Christmas purge, when half the board were forced out by Ertugrul, along with many support staff, one described the atmosphere as "hellish". The report was corroborated by staff from other parts of the business.

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