The secret program, revealed at first by the Washington Post and the Guardian newspapers, said the FBI and the National Security Agency (NSA) can scour data including emails, chats, stored files, video and audio to help analysts track a person's movements and contacts.
Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube and Apple are all said to be part of the program — known as Prism. Most have said they only provide the government with user data as required under the law.
Late Thursday, James Clapper, U.S. director of national intelligence, confirmed the existence of Prism and another recently revealed surveillance program — under which Verizon handed over the phone records of U.S. customers — in an effort to tamp down the public uproar.
- Q&A: Why is the U.S. collecting phone data on its citizens?
Clapper denounced the leaks, insisting both programs were legal and necessary for U.S. security, even as he took the rare step of declassifying and releasing key details.
“The unauthorized disclosure of a top secret U.S. court document threatens potentially long-lasting and irreversible harm to our ability to identify and respond to the many threats facing our nation," he said.
"I believe it is important for the American people to understand the limits of this targeted counterterrorism program and the principles that govern its use," Clapper added.
U.S. President Barack Obama on Friday defended both programs, insisting they were conducted with broad safeguards to protect against abuse.
"Nobody is listening to your telephone calls. That's not what this program is about," Obama told reporters on a visit to California's Silicon Valley.
He said he was initially skeptical about the programs, but concluded that they helped prevent terrorist attacks.
Intelligence shared with U.K.
In an apparent sign of the NSA's determination to vacuum up as much data as possible, the ultra-secret agency recently built a data centre in Bluffdale, Utah, that is five times larger than the U.S. Capitol
The multibillion-dollar centre has fed perceptions that some factions of the U.S. government are determined to build a database of all phone calls, internet searches and emails under the guise of national security.
The disclosure that both the NSA and FBI have the ability to burrow into computers of major Internet services will likely heighten fears that the U.S. government is creating something akin to the ever-watchful Big Brother in George Orwell's 1984 novel.
The Guardian on Friday said the British intelligence agency GCHQ has had access to the Prism system since at least June 2010, adding that the data had generated nearly 200 intelligence reports over the past year.
The Guardian said evidence for GCHQ's involvement came from the same 41-page PowerPoint presentation cited Thursday by both that paper and the Washington Post as the basis for their inital reports on Prism.
That same presentation lays out a timeline during which data from Microsoft and others supposedly became available, starting in 2007 with Microsoft. Apple was the last to join, last October.
GCHQ declined to comment, saying only that it takes its legal obligations "very seriously."
The U.S. and U.K. have a long history of sharing intelligence and, separately, are both members of the so-called Five Eyes intelligence community. The member states, which also include Canada, Australia and New Zealand, frequently share sensitive intelligence.
The NSA and Canada's corresponding group, the Communications Security Establishment, "talk to each other a lot, and have for decades," intelligence and security expert Wesley Wark told CBC News on Friday.
"So the issue, really, is if we have access to that pool of communications, what are we doing with it?" he added. "And how are we ensuring CSE doesn't break its mandate, which strictly limits it to foreign intelligence collection and gives it no role in terms of spying on domestic and Canadian communications?"
Upon confirming the existence of both the phone and internet surveillance programs, Clapper said he wanted to correct the "misleading impression" created by some news articles.
He alleged articles about Prism "contain numerous inaccuracies," though he did not offer specifics.
Senior administration officials defended both programs as critical tools and said the intelligence they yield is among the most valuable data the U.S. collects.
Clapper said Prism can't be used to intentionally target any Americans or anyone in the U.S.
He said a special court, Congress and the executive branch all oversee the program, and that data accidentally collected about Americans is kept to a minimum.
The possibility of a third secret program letting the NSA tap into credit card transaction records emerged late Thursday in the Wall Street Journal report.
The White House has been under fire recently for surveillance-related scandals, including the seizure of journalists' phone records and the Internal Revenue Service's improper targeting of conservative groups.