Companies and country law
While I am opposed strongly to all forms of tyranny, I have to agree with Daniel on this point.
If a company opens its doors in another country, it must abide by the laws of that country, not the country in which it is incorporated. Imagine the furore there would be if Bin Laden Constructions (US Division) Ltd. refused to hand over the details of its bomb-toting employees to the FBI upon service of a legal warrant in the US, simply because making explosives might be legal in Saudi Arabia.
Now everyone KNOWS the Chinese government does not want people talking about Tiananmen Square. It's been made perfectly clear, many times, that anyone spouting anti-government sentiment in China is gulag bait. Those who express such sentiments will doubtless find allies in their cause, but that does not include everyone else, and they do so knowing the risks. Rise against your government, expect to be opposed.
Furthermore Yahoo, besides the moral dilemma of aiding or opposing a despotic regime, must also consider the more far-reaching consequences of its decisions. Such as: Suppose Yahoo DID defy the Chinese government in aid of the rebels. They're an AMERICAN corporation. In case some people haven't noticed, America and China aren't the best of friends. China could then accuse America of using Yahoo to undermine its government's authority - and blammo - World War IV! (or World War III Part 2 depending on your point of view)
I don't envy Yahoo its position. For them, this is the ultimate PR nightmare. But that, too is a risk any company takes when it decides to open its doors in a country known for its oppressive behaviour. Yes, China is a huge market. It's also a bloody dangerous one. High risk - high gain. Or high loss. Yahoo took the gamble. Now they suffer the consequences.
BTW, Daniel, you are partly right about Australia and free speech. The fact is, there is no provision for freedom of speech in our constitution, which means that technically, we don't have it. We also have a sedition law (which was vigorously opposed by the public, but since when did that stop a government passing any law it wants?). However, as you say, our army does not run civvies over in tanks, and chances are, given the "fair go mate" nature of our military men and women, they would refuse any order to do so. With an election looming later this year, our current PM is now lagging badly in the polls because of his freedom-destroying tactics, and unlike the Chinese, Australia is a multi-party democracy, so any government that tries Chinese enforcement tactics soon finds itself on the backbench at the next election!