Yahoo's chairman and chief executive officer Terry Semel strongly defended the company's decision to turn over evidence to Chinese authorities that helped the government convict a local journalist and send him to jail for 10 years.
Companies that do business internationally have to respect and abide by the laws of the countries in which they operate, whether that be China or any other country, he said at the Web 2.0 Conference in San Francisco.
"I don't think there is a publication in the world who also publishes in China, who doesn't observe the laws of China," he says. "And I wouldn't confine it to China per se."
Acknowledging that "it's both a moral and legal issue" and that sometimes "on a personal level, I wince," Semel says companies such as Yahoo have to either respect local laws or exit the country in question. If American companies opt to not do business in a country with whose laws they don't agree with may, that may hold back progress towards greater freedom in that country, he says.
"I've always taken the attitude that you're better off playing by the government's rules and getting there," he says. "Part of our role in any form of media is to get whatever we can into those countries and to show and to enable people, slowly, to see the Western way and what our culture is like, and to learn."
He also acknowledged that China is a very important market for his company because of its sheer size in terms of internet, PC and wireless device users. Yahoo has invested heavily in China in recent years, including US$1 billion this year to buy a stake in China-based Alibaba.com. and $120 million in 2003 to buy Hong Kong-based 3721 Network Software.
In September, press advocacy group Reporters Without Borders blasted Yahoo, saying the California company had provided email from journalist Shi Tao's private Yahoo account as evidence in a trial in which he was convicted of divulging state secrets to foreigners.
"We already knew that Yahoo collaborates enthusiastically with the Chinese regime in questions of censorship, and now we know it is a Chinese police informant as well,” the press freedom organisation said in a press release. "The company will yet again simply state that they just conform to the laws of the countries in which they operate. But does the fact that this corporation operates under Chinese law free it from all ethical considerations? How far will it go to please Beijing?”
Shi Tao was convicted in April of sending the text of an internal message which Chinese authorities sent in 2004 to his newspaper, the daily Dangdai Shang Bao (Contemporary Business News), on to foreign websites, according to the watchdog group. That message warned journalists about possible social unrest tied to the 15th anniversary of the massacre in Tiananmen Square, where in June 1989, the Chinese government crushed a student-led democracy movement.