Brussels urges privacy review

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Brussels called for an overhaul of Britain’s data privacy laws on Tuesday amid concerns that they do not protect web users from being unwitting targets of “behavioural advertising”.

The European Commission threatened Britain with legal action after a long dispute over the way the UK has handled new technology, trialled by BT, that tracks web users’ habits in order to offer them relevant advertisements.

The complaint, spearheaded by Viviane Reding, the bloc’s telecommunications commissioner, spoke of “structural problems in the way the UK has implemented European Union rules ensuring the confidentiality of communications”.

The proceedings mentioned Phorm, the behavioural advertising company that angered consumers by carrying out trials of its technology on BT internet users in 2006 and 2007 without informing customers.

Though targeted advertising is not illegal, EU rules make clear that consumers must be informed that they are being monitored.

Phorm and BT are preparing to roll out the internet monitoring technology to UK customers by the end of the year. They plan to give customers clear notification and the ability to opt out. Official trials, carried out by the two companies in 2008, complied with EU rules.

“Phorm’s technology is fully compliant with UK legislation and relevant EU directives. This has been confirmed . . . by the UK regulatory authorities . . . We do not envisage the Commission’s proceedings will have any impact on the company’s plans,” Phorm said.

BT and Phorm have received support in the UK from Lord Carter, minister for communications, technology and broadcasting, who sees the technology as a potential way of hitting back against Google’s dominance in online advertising.

Brussels, however, has flagged up the issue of data protection and privacy.

Meglena Kuneva, European commissioner for consumers,said a fortnight ago that companies involved in social networking must do more to respect consumer privacy or regulators would intervene.

The European Commission also plans to give guidance on privacy related to technology such as radio frequency identification (RFID) tags, which can be used to track the movements of people and goods.

In its complaint to the UK on Tuesday the Commission questioned UK rules allowing data interception when there were “reasonable grounds” to believe consent had been given. It pointed to the lack of an independent supervisory authority dealing with interceptions in Britain.

“Technologies like internet behavioural advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules,” Ms Reding said.

“I call on the UK authorities to change their national laws and ensure that national authorities are duly empowered and have proper sanctions at their disposal.”

The UK’s Home Office and the Department for Business, Enterprise and Regulatory Reform will respond to the Brussels complaint.

A Commission spokesman said other countries were likely to receive similar complaints, without specifying which.

Additional reporting by Tim Bradshaw

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