A woman is suing her high-flying female Yahoo executive boss for alleged sexual harassment.
Software engineer Nan Shi claims Maria Zhang, a senior director of engineering at Yahoo Mobile, said she would have a 'bright future' at Yahoo if she had sex with her.
Miss Zhang denies the allegations.
A Yahoo representative said: "There is absolutely no basis or truth to the allegations against Maria Zhang. Maria is an exemplary Yahoo executive and we intend to fight vigorously to clear her name."
Internet company Yahoo! has called claims that UK spy agency GCHQ intercepted and stored webcam images of millions of users as a "whole new level of violation".
In its latest report on files leaked by US whistleblower Edward Snowden, the Guardian newspaper claims a surveillance programme operated by GCHQ, collected still images of Yahoo webcam chats in bulk.
In a furious reaction to the report, a Yahoo spokeswoman said: "We were not aware of, nor would we condone, this reported activity.
"This report, if true, represents a whole new level of violation of our users' privacy that is completely unacceptable and we strongly call on the world's governments to reform surveillance law consistent with the principles we outlined in December.
"We are committed to preserving our users' trust and security and continue our efforts to expand encryption across all of our services."GCHQ declined to comment on the claims.
UK intelligence agency GCHQ "intercepted and stored" the webcam images of internet users who were not suspected of any wrongdoing, the Guardian claimed, citing secret documents.
Files dated between 2008 and 2010 allegedly show a monitoring programme, known as "Optic Nerve", stored still images from Yahoo webcam chats and saved them to agency databases with the help of its US counterpart the National Security Agency.
GCHQ has consistently said its activities are necessary and "carried out in accordance with a strict legal and policy framework”.
Yahoo has apologised to rival internet giant Google after posting a screen capture on its Twitter account over an earlier disruption to its services.
The company, whose own Web-based email service experienced a massive outage in December, later put it down to "bad judgement".
The Internet company Yahoo has revealed its new logo.
In a statement on its website, the firm said it wanted a logo "that stayed true to our roots ... yet embraced the evolution of our products".
Yahoo has been displaying a different variation of its logo on its home page every day for a month counting down to today's announcement.
Yahoo is set to make photo-sharing site Flickr "awesome" again, as the company revealed it has redesigned the website.
The news comes as Yahoo announced its $1.1 billion (£723m) takeover of blogging platform Tumblr.
Speaking at an event in New York City, Yahoo said it was now offering Flickr users one terabyte of online storage for free, enough to store more than 500,000 images at a resolution common to most smartphones.
The company also revealed the new website will emphasise photos rather than text or white space, creating bigger pictures, shared in full resolution.
High school dropout David Karp has sold his blogging website Tumblr for $1.1bn to Yahoo! He founded Tumblr in his bedroom in his mother's apartment in 2007 when he was 21.
It had 75,000 users in a fortnight of its launch and now there are roughly 110 million.
It means a $250m (£164m) fortune for the 26-year-old founder, six years after he created it.
US Correspondent Robert Moore reports.
US tech giant Yahoo has snapped up Tumblr in a major US deal that will reportedly net the blogging site's 26-year-old founder a 250 million US dollar (£164 million) fortune six years after he started it.
The purchase of Tumblr by Yahoo would add to established Internet companies like Google and Facebook that have spent $1 billion or more each buying startup companies in the battle for competitive edge in the technology business market.
Facebook last year paid cash and stock initially valued at about $1 billion to buy popular photo-sharing service Instagram, according to figures quoted in The Wall Street Journal.
Google paid $1.65 billion in stock seven years ago for YouTube, the online-video giant.
In a smaller deal, AOL bought Huffington Post for $315 million in 2011.