Talk Talk walks away from Phorm

Phorm has been dealt another body blow

Controversial online advertising firm Phorm suffered another setback yesterday, after Talk Talk pulled out of a commercial agreement.

The news comes just days after BT dealt a major blow to Phorm by scrapping any immediate plans to use the firm's Webwise Discover product. Phorm shares collapsed by nearly 42 per cent on the news, from 455p yesterday to 265p at the time of writing.

Phorm has come in for strong criticism from privacy groups, which have argued that its internet tracking technology is too intrusive, despite claims from Phorm that the collected data is completely anonymous.

"Unfortunately, on 7 July 2009, TalkTalk Telecom Ltd, a wholly owned subsidiary of the Carphone Warehouse Group PLC, terminated its agreement with Phorm," read a Phorm statement.

"The directors note that this relationship had not extended to any form of trial in contrast to BT and some international internet service providers [ISPs]."

Phorm appears to be confident of its progress with "eight major ISPs" with which it is in advanced negotiations, and claims that it still has a commercial agreement with BT.