Yahoo accused of spying on users’ emails

Yahoo is to face a class action lawsuit accusing it of spying on users' emails to boost its ad revenue.

More than one million people are expected to take part in the case, after a Californian judge ruled that any Yahoo Mail users who sent or received an email from 2 October 2011 can sue.

Additionally, a group of people in California who did use Yahhoo's services may collectively sue the firm under the state's Invasion of Privacy Act.

Those users allege the tech giant copied and analysed their emails for keywords and attachments, aiming to turn the data into a targeted advertising campaign for its 275 million customers.

Yahoo derived 80 per cent of its income from search and display advertising last year.

The company told US District Judge Lucy Koh that some users had consented to its actions simply by continuing to email Yahoo addresses after learning what Yahoo was doing, but Koh rejected this argument.

Plaintiffs seek damages and a ban stopping Yahoo from spying.

Koh dealt with a similar case last year, when a class action lawsuit was brought against Google by Gmail users as well as non-Gmail users.

However, Koh rejected the case, saying it wasn't clear which users had and hadn't consented to Google's behaviour.

Yahoo missed its revenue and profit targets in its latest quarter, but continued to make money through its online advertising business.

Display advertising revenue rose 2.3 per cent to 310 million, which accounted for 40 per cent of its total revenues.

Meanwhile, search-based revenues increased 19.5 per cent year on year to 350 million.

Although revenues for this first quarter rose to 800 million, after taking all payments to ad partners off the total, Yahoo was left with 700 million.