Phorm, the company whose web tracking technology sparked international controversy, had a bad Monday as BT got wise and decided to drop its use of Phorm’s Webwise product.

Phorm’s loss, however, is a major victory for consumers.

Had BT implemented Webwise extensively, it would have arguably represented one of the most egregious violations of consumer privacy ever.

With Webwise in place, the browsing behavior of millions of BT internet users would have been tracked for the purpose of serving up targeted ads to them. Because Webwise works at the ISP level, this form of tracking is about as invasive as it gets.

That would have potentially provided a compelling proposition for Phorm, advertisers and BT but a very bad one for consumers. After all, most consumers pay for internet access; being sold out to Phorm isn’t what BT’s paying customers expect when they make payment to BT every month.

Unfortunately, BT customers aren’t in the clear yet. In announcing that it wasn’t moving forward with Phorm, BT left the door open:

We continue to believe the interest-based advertising category offers major
benefits for consumers and publishers alike.

However, given our public commitment to developing next-generation broadband and
television services in the UK we have decided to weigh up the balance of
resources devoted to other opportunities.

Given these resource commitments, we don’t have immediate plans to deploy Webwise today. However the interest based advertising market is extremely dynamic and we intend to monitor Phorm’s progress with other ISPs and with Webwise Discover before finalising our plans.

Phorm, which is listed on the AIM, saw its shares plummet on the news. As The Guardian notes, however, Phorm has other ISPs in play and the company is far from dead. That means that regardless of what happens with BT, privacy advocates likely still have many Phorm-related battles ahead.

Photo credit: rpongsaj via Flickr.