US authorities threatened to fine Yahoo US$250,000 (A$270,500) a day if it failed to comply with a secret surveillance program requiring it to hand over user data in the name of national security, court documents showed Thursday.
The documents, made public in a rare unsealing by a secretive court panel, "underscore how we had to fight every step of the way to challenge the US government's surveillance efforts", Yahoo general counsel Ron Bell said in a blog post that will again raise privacy concerns.
The documents shed new light on the PRISM snooping program revealed in leaked files from former National Security Agency contractor Edward Snowden.
The program allowed US intelligence services to sweep up massive amounts of data from major internet firms including Yahoo and Google. Officials have said the deeply contentious program ended in 2011.
The 1,500 pages of documents were ordered released by the Foreign Intelligence Surveillance Court in the case dating back from 2007.
"We refused to comply with what we viewed as unconstitutional and overbroad surveillance and challenged the US government's authority," Bell said.
Yahoo's court challenge failed and it was forced to hand over the US user data.
"At one point, the US government threatened the imposition of $250,000 in fines per day if we refused to comply," Bell revealed.
Since the Snowden leaks, Yahoo and others have been seeking to make public these court documents to show they were forced to comply with government requests and made numerous attempts to fight them.
The opening of these court documents to the public is extremely rare, Bell said.
"We consider this an important win for transparency and hope that these records help promote informed discussion about the relationship between privacy, due process, and intelligence gathering."
But he said portions of the documents remain sealed and classified.
The redacted court records, seen by AFP, showed Yahoo challenged the government on constitutional grounds, saying the surveillance program violated protections against unreasonable search and seizure.