Yahoo Faced Big U.S. Fines Over User Data

SHAFAQNA – A secret legal battle between the U.S. government and Yahoo Inc. YHOO +0.29% over requests for customer data became so acrimonious in 2008 that the government wanted to charge the Internet company $250,000 a day if it didn’t comply.

Yahoo made the threat public Thursday after a special federal court unsealed 1,500 pages of legal documents from a once-classified court battle over the scope of National Security Agency surveillance programs. The documents shed new light on tensions between American technology companies and the intelligence community long before former NSA contractor Edward Snowden began leaking in 2013.

The requests, and the long battles that can follow at the Foreign Intelligence Surveillance Court, traditionally are secret. Until last summer, Yahoo wasn’t allowed to say that it had challenged government surveillance efforts—even without adding any other details. Google Inc. GOOGL -0.39% and Microsoft Corp. MSFT +0.34% have also challenged government records requests in court.

“The issues at stake in this litigation are the most serious issues that this nation faces today—to what extent must the privacy rights guaranteed by the United States constitution yield to protect our national security,” Marc Zwillinger, an outside counsel for Yahoo wrote in a legal brief in May 2008.

Court documents don’t reveal exactly what the government wanted from Yahoo. In one brief, Yahoo states the main issue of the case is whether the constitution protects the communications of U.S. citizens or legal residents believed to be outside the U.S.

Even after the documents were unsealed, portions were redacted, including the number of requests the government made of Yahoo.

The bulk collection of Internet records from U.S. companies can lead to the collection of data on people in the U.S.

In its legal response, the Justice Department said the government “employs extensive procedures to ensure that the surveillance is appropriately targeted.”

Beginning in November 2007, the government began requesting “warrantless surveillance” of certain Yahoo customers, according to court records. Yahoo objected and asked the surveillance court to block the government request. A judge refused, and threatened Yahoo with a fine. The Justice Department had asked for at least $250,000 a day, though the judge was less specific. Yahoo complied with the order in May 2008.

“We refused to comply with what we viewed as unconstitutional and overbroad surveillance and challenged the U.S. Government’s authority,” Ron Bell, Yahoo’s general counsel, said in a written statement. “Our challenge, and a later appeal in the case, did not succeed.”

The dispute revolved around the Protect America Act, a 2007 law that allowed the government to eavesdrop, without a warrant, on people believed to be connected to terrorist groups. The law expired in 2008, but was replaced by other laws that grant the government essentially the same powers.

In a joint blog post, the Justice Department and the Office of the Director of National intelligence said the court found that the government “has sufficient procedures in place to ensure that the Fourth Amendment rights of targeted U.S. persons are adequately protected” and that the requests were “reasonable.”

The disclosure comes as some intelligence officials are pushing to declassify more of the legal reasoning for controversial surveillance programs. That doesn’t mean the government has backed down in the use of such programs.

From January to June 2013, the most recent period for which Yahoo has released the data, the company previously said it fielded between zero and 999 foreign intelligence requests for user content covering between 30,000 and 30,999 accounts. It is unclear how many of those requests Yahoo fulfilled.

Yahoo and other tech firms have pushed to make public more information about government requests for user data.

Privacy advocates have long engaged in similar legal debates with the government. Until Mr. Snowden’s leaks revealed details of government surveillance efforts, those debates were largely theoretical.

As Reggie Walton, an FISC judge, noted after his threat of a fine to Yahoo in 2008, “This order is sealed and shall not be disclosed by either party.”

—Douglas MacMillan contributed to this article.

Write to Danny Yadron at

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