EU to sue Britain over Internet privacy

(AP) -- The European Union started legal action against Britain on Tuesday for not applying EU data privacy rules that would restrict an Internet advertising tracker called Phorm from watching how users surf the Web.

The regulators also warned that they could force social networking sites like Facebook or MySpace to hide minors' profiles from search engines.

The European Commission said Britain should outlaw Internet traffic interception and monitoring unless users give explicit consent that their behavior can be tracked and analyzed.

It said it had received numerous complaints about BT Group PLC, which tested Phorm's service in 2006 and 2007 without informing customers involved in the trial. Phorm analyzes Internet users' behavior so it can display ads that might appeal to them.

"Such a technology in the view of the European Commission and European data protection law can only be used with the prior consent of the user," said EU spokesman Martin Selmayr.

Regulators sent a first legal warning to Britain on Tuesday, asking it to explain or change the way it interprets EU rules because it currently allows interception when it is unintentional or when a tracker has "reasonable grounds" to believe that consent was given.

Britain has two months to reply. The European Commission can issue more warnings before it can take a government to an EU court where it may be ordered to change national law or face daily fines.

BT sought consent from users when it tried Phorm again from October to December 2008. The company says on its Web site that the trial didn't keep or pass on information that could personally identify users and what they did.

Internet companies, privacy advocates and regulators disagree on what kind of traffic data is personal - such as IP addresses that give a location - and whether storing information on a crowd of people might evade strict privacy rules because they cannot be identified individually.

Phorm has worked with three Internet operators reaching 70 percent of Britain's broadband market - BT Group PLC, Virgin Media Inc. and Carphone Warehouse Group PLC's TalkTalk.

BT said it had no immediate comment on the decision. Messages left with Talk Talk, Virgin Media, and the London office of Phorm Inc. were not immediately returned.

Separately, EU Media Commissioner Viviane Reding said that social networking sites should move quickly to step up default privacy settings, especially for younger users.

"Is every social networker really aware that technically, all pictures and information uploaded on social networking profiles can be accessed and used by anyone on the Web?" she asked in a video message.

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