Shunned Profiling Technology on the Verge of Comeback ("deep packet inspection")

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http://online.wsj.com/article/SB10001424052748704243904575630751094784516.html

NOVEMBER 24, 2010
Shunned Profiling Technology on the Verge of Comeback
By STEVE STECKLOW and PAUL SONNE

One of the most potentially intrusive technologies for profiling and targeting Internet users with ads is on the verge of a comeback, two years after an outcry by privacy advocates in the U.S. and Britain appeared to kill it. The technology, known as "deep packet inspection," is capable of reading and analyzing the "packets" of data traveling across the Internet. It can be far more powerful than "cookies" and other techniques commonly used to track people online because it can be used to monitor all online activity, not just Web browsing. Spy agencies use the technology for surveillance.

Now, two U.S. companies, Kindsight Inc. and Phorm Inc., are pitching deep packet inspection services as a way for Internet service providers to claim a share of the lucrative online ad market. Use of deep packet inspection would give advertisers the ability to show ads to people based on extremely detailed profiles of their Internet activity. To persuade Internet users to opt in to be profiled, Kindsight will offer a free security service, while Phorm promises to provide customized web content such as news articles tailored to users' interests. Both would share ad revenue with the ISPs. Kindsight says its technology is sensitive enough to detect whether a particular person is online for work, or for fun, and can target ads accordingly. "If you're trying to engage in one-stop-shopping surveillance on the Internet, deep packet inspection would be an awesome tool," says David C. Vladeck, director of the Federal Trade Commission's Bureau of Consumer Protection...

Until 2007, Phorm was known as 121Media Inc. It delivered targeted ads, particularly pop-ups, to users who downloaded free software. The ads were "based on an anonymous analysis of their browsing behavior, which is likely to indicate their commercial and lifestyle interests," according to corporate filings. Several Internet security companies, including Symantec Corp., flagged part of 121Media's adware system as "spyware." Microsoft called it a "trojan". Facing "a combination of public perception and legal and technological challenges," 121Media eventually shuttered its adware business and renamed itself Phorm. In February 2008, Britain's biggest ISPs — BT, Virgin Media and TalkTalk — announced plans to implement Phorm's service. Those plans quickly unraveled. Suspicions earlier had arisen among some BT subscribers who discovered they were being routed through an unfamiliar Internet address when they tried to visit a website...

Kindsight's roots trace to an in-house project known as Project Rialto at Alcatel-Lucent. A 2007 job posting on Project Rialto's website described the company's work as developing "systems that can handle massive volume of data for in-depth analysis of user behavior to enable targeted advertising." Project Rialto eventually became Kindsight, a spinoff. At an Alcatel-Lucent conference held in September 2008 in Beverly Hills, Mr. Gassewitz spoke at a session called "Merging Technology and Advertising." A summary of his comments, posted on Alcatel's website, reads in part: "Through technologies like deep packet inspection," Internet service providers "can gather even more information about consumers" than rivals such as Google or Facebook....