Yahoo fired back Wednesday at a report that said it built a software program to search all of its customers' incoming emails for U.S. intelligence officials.
Reuters reported Tuesday that Yahoo scanned millions of Yahoo Mail accounts at the behest of the National Security Agency or FBI. It cited three former employees and a fourth person apprised of the events.
The report said officials allegedly wanted Yahoo to search for "a set of characters" in emails.
Yahoo called the report "misleading."
"We narrowly interpret every government request for user data to minimize disclosure. The mail scanning described in the article does not exist on our systems," Yahoo said in a statement.
Earlier, the company had said it was law abiding and complied with the laws of the United States.
In response to the Reuters report, two major U.S. email service providers — Microsoft and Google — said that their email services are safe from U.S. government spies.
The American Civil Liberties Union said Tuesday it was disappointed with Yahoo's reported compliance with the U.S. government, calling it "unprecedented and unconstitutional."
Yahoo's stock was slightly higher in premarket trading Wednesday. The company's stock is up more than 29 percent this year.
Disclosure: CNBC has a content-sharing partnership with Yahoo's finance site.