CPW builds wall between customers and Phorm

As US prepares 'welcome' party

In a telephone interview on Monday, Schwartz said: "If they're still arguing the distinction that PeopleOnPage [the product distributed by 121Media] was not spyware, then there has been a major misunderstanding. If Phorm is again saying that it was simply adware then that raises serious concerns about them from our point of view."

Schwartz said: "When we first met with Phorm they actually told us they had all of the ISPs on board." He believes the reception ad targeting based on users' browsing habits will get Stateside is dependent on how it is rolled out. "Simply clicking 'OK' on the first sign up screen is not good enough because we know people don't read those things."

"There are precedents where the FTC has ruled that's an unfair practice."

New that Phorm could face a frosty welcome in the US could compound its woes in the stock market. Investors deserted the firm yesterday, as a massive PR offensive aimed at calming anger against Phorm failed. Its stock plummeted 35 per cent on the Alternative Investment Market (AIM).

Phorm closed the day down 31 per cent, which wiped more than £100m off the value of the company. At time of writing, in early trading today Phorm remained around its new £20.00 mark. See here for the latest.

The firm has been forced to issue a statement to the markets denying the plunge is the result of undisclosed commercial developments. In a story published late yesterday by the Financial Times, Phorm also sought to calm market fears that the storm of protest seen online against Phorm could jeopardise its financial potential. BT, Virgin Media and Carphone Warehouse are all standing by their deals to pump customer browsing data into Phorm's ad targeting system, albeit in a more restricted way by Carphone.

Phorm's statement to investors is here (pdf). It says the firm is looking to raise $65m in additional backing and that it "continues to be in advanced discussions with other ISPs both in the UK and other markets". ®