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Phorm: How it went down

What could possibly go wrong?

The smart choice: opportunity from uncertainty

If not people skills, Ertugrul however undoubtedly has a gift for raising cash, which Phorm has needed a lot of. A glance at the firm's top brass, past and present, bears testimony to his connections in the banking world. But frequent public missteps outweighed the benefits to Phorm brought by Ertugrul's financial friends.

First, and probably acting on terrible advice, he sanctioned PR agencies to swarm the web, pasting boilerplate defences of Phorm's technology anywhere it was mentioned. The price the firm paid for such "social media" expertise is unknown, but one Reg PR acquaintance joked last year that "everyone wants a bit of it!". As far as we know, Phorm engaged up to five PR agencies at one time.

Throughout the affair, Ertugrul's personal public statements dripped with unappealing hubris. There was his assertion that BT would "most definitely" rollout the system by the end of 2009, for example. It never seemed likely.

Things took a darkly comic turn recently with the launch of the Stopphoulplay.com site, which instantly backfired and led commentators to publicly wonder how long the firm had left. The brainchild of ex-Aitken, ex-Goldsmith and ex-Pinochet flack Patrick Robertson, the disastrous attempt at rebuttal is surely destined for the how-not-to-do-it section of PR textbooks, should such volumes exist.

Phorm tried very hard to make its case, but none of its arguments convinced the public. Implicit claims its technology was a Good Thing because Google is powerful were like asking everyone to swallow a spider to catch a fly. The simple fact is, Joe Public has no compelling reason to care that ISPs operate on thin margins and no reason to care if advertising is poorly targeted.

To take something from him - his data - Phorm had to offer something in return. "Webwise Discover", its content targeting service, was far too little far too late.

The worst misstep of all, of course, was his agreement to conduct trials in secret with BT. Ertugrul can scarcely be blamed for that however, as TalkTalk demonstrated when it followed BT away from the table this week. Without BT he had nothing, and without secret trials, he wouldn't have had BT.

They might have gotten away with it, if it weren't for the pesky kids of HM Government. If authorities including the Home Office and Information Commissioner's Office hadn't effectively acted as taxpayer-funded consultants on the project, they might have been in a reasonable position to deliver a slap on the wrist. Instead, those authorities now face the scrutiny of the European Commission, which has initiated formal legal proceeding against the UK government for failing to properly implement EU privacy laws.

Phorm quite reasonably adopted the strategy of distancing itself from the legal action, emphasising the implementation of law was a matter for authorities. But the cosy relationships between Phorm and BT, regulators and government that eventually stirred Brussels, exposed by Freedom of Information requests, mean it is inextricably and damagingly linked to the proceedings. Phorm won't admit it, but the link on its website to an advertising industry lobby group press release appealing for the action to be dropped does so tacitly.

The firm may yet mount an against-the-odds return to the UK, perhaps in a couple of years, perhaps longer - it has cash on its books to be getting on with. What is certain is that someone will attempt something similar in future.

For El Reg, the positive thing to draw from this saga is not that Phorm lost business. Rather it's that the next party to try to monitor internet connections on behalf of commercial interests won't trial technology without consent, is unlikely to receive legal consultancy from government officials and might actually get into trouble if it breaks the law. ®

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