Dr. Richard Clayton has written a white-paper on the inner workings of Phorm (the information was gleaned from a workshop by the company).
One could, possibly, argue that it is similar to the way Opera used to hae a free (ad-enabled) and a pay-for (ad-free) version of the browser and in some ways it is, in that content is used to target ads without the prior consent of the content producer. However, there are a few differences that are obvious. One is that Opera carefully placed the ads well out of the way of the page, so there was never any confusion about the fact that it was an Opera-sourced ad. Another is that the Opera ad-serving was opt-in on the part of the user (and rather explicitly so, they actually had to go to some lengths to install the browser in the first place).
Secondly, Phorm is not opt-in, it is (at best) opt-out. I have been
informed that the Phorm kit should only place ads in
specially-prepared Phorm-tags, so worries about Phorm ad-infesting
innocent sites MAY have been overblown. Just recently, BBC News
reported taht Phorm must be opt-in, rather than the opt-out they were
hoping for. With any luck, this will make a Phorm roll-out so much
more expensive taht it's considered unprofitable (it's also a pure
administration nightmare, especially if the opt-out is taken as being
"do not pass through the Phorm kit" rather than the
easier-to-implement "do not let the Phorm kit do active stuff to the
traffic").
Thirdly, Phorm are forging cookies in the name of other sites. Normally, a third-party cookie is easy to spot, unfortunately, Phorm do it while claiming to be the site in question, so... They then filter the cookie they set away. It is rummoured that the cookie is named "web wise" and it may be that creative scribbling in that cookie may break the system enough that your customers will complain (to you) and you can then tell them that it's because of Phorm and they can complain to their ISP.
It is unclear if this only happens for pages that fall under "May have Phorm ads on them" or all pages. If it's specifically only for pages within domains that have paid to have Phorm ads, it may count as actually being asked for.
You can refuse to sign up with Phorm to display ads on your pages. You can refuse Phorm to display ads on your behalf.
This is one of Ingvar's essays