Yahoo Handed US Spies Access to Users’ Messages (YHOO)

Yahoo has allegedly built surveillance tools to allow U.S intelligence agencies unprecedented access to its users emails.

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According to a Reuters report, it has been revealed that Yahoo! Inc. (NASDAQ:YHOO) last year secretly built a custom surveillance program that enabled the internet company to scan hundreds of millions of Yahoo Mail accounts as a secret directive coming from the National Security Agency or the FBI.

Based on the report, which cited anonymous former Yahoo employees, U.S. intelligence officials were looking for a specific “set of characters” or phrases within Yahoo incoming emails, which included email subject, body as well as attachments. The U.S. agency, however, has denied speculations that a “classified directive” was issued to Yahoo’s legal team, ordering them to scan customers’ incoming emails or specific email accounts.

According to the two former Yahoo employees, the company’s CEO, Marissa Mayer, chose to obey the directive by allegedly allowing the US intelligence agencies to gain access to Yahoo customers’ stored emails. The allegations are in sharp contrast with Mayer’s previous comments regarding consumer privacy. During TechCrunch’s Disrupt conference in Sept. 2013 the executive said she was “proud to be part of an organization that from the very beginning in 2007, with the NSA and FISA and PRISM, has been skeptical and has scrutinized [these types of] requests.” Mayer also said that “[r]eleasing classified information is treason. It generally lands you incarcerated.”

Despite the rhetoric, Mayer’s decision seems to have lead to the resignation of Yahoo’s former Chief Information Security Officer Alex Stamos in June of 2015. Following Mayer’s decision to authorize the program, Stamos, who is now Facebook’s (NASDAQ:FB) security chief, told his subordinates that a programming flaw could have let hackers break into Yahoo’s stored emails. Stamos however, never articulated the real reasons behind his resignation. Meanwhile, according to Facebook, the company had never faced or seen a directive like the one served to Yahoo.

“Facebook has never received a request like the one described in these news reports from any government, and if we did we would fight it,” the social networking giant said in a statement.

Reuters also failed to confirm if any other company has been issued the same secret type of directive.

Earlier this year, Apple (NASDAQ:AAPL) expressed its willingness to defy an FBI request ordering the company to write custom code that would enable it to break encryption on an iPhone that was used in a terrorist attack incident in San Bernardino, California. Following Apple’s public stance, more than 40 top tech companies expressed their support for Cupertino by signing amicus briefs.

The news regarding Yahoo agreeing to a spy agency’s demand by searching all arriving messages comes after the internet company announced it was the victim of a “state sponsored” hack that leaked the personal details of over 500 million of its users. The revelation has brought Yahoo’s security practices under scrutiny as the Sunnyvale, California-based company is currently trying to complete a $4.8 billion deal to sell its core business to telecom giant Verizon Communications (NYSE:VZ).

The news appears to be moving the Street to the neutral side this morning, leading Yahoo stock to a marginal pre-market gain of 22 cents to $43.40.

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