Yahoo is to face legal scrutiny over the way it handled the email-related information of users for advertising purposes.
A report on the BBC said that the firm is facing a class action suit that could involve as many as one million complainants.
Yahoo is accused of misappropriating non-customer information and using it for advertising purposes. The case relates to emails sent from 2011 onwards.
V3 asked Yahoo for its comment on the case, but had received no reply at the time of publication.
The BBC said that part of Yahoo's defence is that the non-Yahoo users had continued to email Yahoo accounts, and engage in conversations, and that this suggested an acknowledgement of the system and an acceptance of its practices.
The case is being presided over by US District Judge Lucy Koh in San Jose, reports Reuters, who said that Yahoo could change its practices but that this would not undo the damage.
"Yahoo may have to, as a practical matter, adjust its scanning practices on an individual basis," said Koh. "That does not, however, change the fact that plaintiffs seek uniform relief from a common policy that Yahoo applies to all class members."
Yahoo updated its email systems in 2011 and immediately earned criticism for the advertising theme of the update.
The company told users at the time via a pop-up box that their content could be scanned for advertising purposes, and pointed out that users can change their settings and opt out of internet advertising on the privacy pages.
Advertising is a key earner for Yahoo, accounting for as much as 80 percent of its revenues, according to the firm's last financial report.
Yahho said in 2014, after buying video ad technology provider BrightRoll for $640m, that it has the largest web advertising platform in the US.
"This acquisition will accelerate the growth of both companies. We can help BrightRoll scale to even more advertisers globally and they can bring their tremendous platform offering to Yahoo's advertisers," said chief executive Marissa Meyer in a blog post at the time.
"The combination builds positive momentum for Yahoo's broader display advertising business in 2015."
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