As I was going through the news items of the day, a legal case against Yahoo! has been started. Now from my limited understanding of law, here are my thoughts.
The case alleges that Yahoo! is providing information to the People's Republic of China about user searches. As a result of this information some users may have been or are being punished. Yahoo! is contending that it must abide by local laws in order to conduct business in the People's Republic of China.
So here are my thoughts...
First, Yahoo! must follow the laws of the country it is conducting business. As much as Yahoo! complies with the laws for conducting business in the United States, it must similarly follow the laws of the People's Republic of China.
A precedent for such matters relating to Internet services was created in the LICRA v. Yahoo! case. In short, Yahoo! was required to block access to auctions selling Nazi paraphernalia. The precedent is that local governments can enforce there respective laws, regardless of the Internet companies base of operations. In this case the laws of France applied to Yahoo!, not the laws of the United States. As the United States allows the auctioning of Nazi paraphernalia.
So the question of whether or not Yahoo! must abide by local law has been somewhat answered. Yahoo! was following the local law of the People's Republic of China.
To close I do not think the actions or the law of the People's Republic of China is ethical, but what I think does not matter in so far as everyone must obey the law. The laws of one nation are not above or below the laws of another. I believe the word sovereignty might play a role in this case. The People's Republic of China has a sovereign right to create the laws that it deems necessary, just as the United States has the same right. However, one nation cannot enforce its laws upon another without violating sovereignty.
Of course I am not a legal expert and these are just my thoughts so far on the case. I wait in anticipation for further developments and the conclusion of this case.
15 minutes ago