It's not a matter of obeying local laws
It's having the integrity not to operate purely for profit in countries that have such laws.
Google and Yahoo can't break Chinese law, and you're quite right in saying they shouldn't be expected to face jail time in a Chinese prison for doing so.
But neither should they support the governments behind such laws by expanding their economies and offering their services.
Google and Yahoo can't survive without operating in China? I don't think so, I maybe wrong but I have feeling Google and Yahoo shareholders might just be able to survive financially without the profits from operating there.
The good they do for their employees while operating in China? If their culpability in assisting the capture and imprisonment of even a single Chinese citizen doesn't counter this I don't know what would.
Google are far less culpable of course, because all they do is limit what their search engine can look up - not really that big a deal in the scheme of things. Yahoo's owners on the other hand should be ashamed of themselves. I'm sorry, but balancing the lifestyles of the exceedingly rich versus helping to imprison a free speech advocate is hardly a difficult decision. Their choice is simple, which should be to leave the country they're not helping to make any better.
Some argue that the mere presence of western corporations in China helps to soften the stance of a totalitarian regime. I haven't seen any evidence of this - but I'll acknowledge the possibility does exist. I'd just like someone to prove it in some way, because it would make me feel a bit better about using Google. I no longer use Yahoo - not because they gave up a name when they had no choice but to do so, but because they continue to operate for profit in the country that made them do it.
At the moment I'm not convinced earning huge profits in countries run by governments such as the Chinese is anything but exploitation and greed.
Do I benefit from these companies being there? Quite possibly, but I do try my best to avoid Chinese goods manufactured in sweat shops run by Japanese and Western corporations. It is actually impossible to do completely if you want to own a computer, a DVD player and a TV - but you can at least try. It just costs a bit more - and yes I'd rather pay a lot more for a computer, and have a clean conscience.