Yahoo Unseals Case Details from its User Data Fight Vs NSA

Yahoo! Inc. YHOO revealed that the U.S government had threatened to fine the company $250,000 per day if it refused to comply with demands to hand over user data to intelligence agencies for national security.  

Yahoo considered the demands to be illegal and even fought a legal battle to avoid surrendering the data but ultimately had to give in to the federal government's demands.

The details of Yahoo's unsuccessful court fight against government surveillance were revealed when a federal judge ordered the unsealing of files. In a small victory for the company, a federal court allowed Yahoo to unseal 1,500 pages of legal documents of its secretive court battle against National Security Agency ("NSA") surveillance programs. The documents shed new light on pressure between American technology companies and the intelligence court and the extent and power of the government's surveillance practices.

The documents disclose how federal authorities threatened to impose a fine of $250,000 a day after the Internet company refused to reveal user information in 2008. Legal representatives of the government also asserted that Yahoo had no substantial material to argue for its users' privacy and the authorities repetitively cautioned the company against divulging information to the affected users.

Yahoo was not the only company asked to reveal user data to government agencies. Ex-NSA contractor Edward Snowden had leaked information about the NSA's global Internet surveillance program PRISM, under which the agency collected user data of Internet companies like Google (GOOGL), Facebook Inc. FB, Apple Inc. AAPL, Yahoo! Inc. and Microsoft. As part of this operation, they can keep online activities under surveillance to determine any threat to national security.

The issue is important for these technology companies who have claimed the practice to be unconstitutional and have alleged that the NSA sometimes collects data without their consent. Technology companies have come under pressure in different countries because of these government actions and countries like China and Germany have threatened to issue sanctions. Companies like Cisco have also seen a resultant reduction in revenue.

Yahoo currently holds a Zacks Rank # 5 (Strong Sell).

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