Yahoo seeks to dismiss China case - Yahoo! News
This is a really interesting legal case. Yahoo was sued in the US by people representing some Chinese journalists who were convicted in China of violating Chinese law. Yahoo's involvement was to provide evidence from their logs and stored account data. The argument is that Yahoo should have resisted more and provided less information under US and International laws.
The people working for Yahoo in China are in a tough place because they could easily be arrested and held in contempt for failing to comply. Widespread corruption in China would almost certainly lead to extra-legal consequences for Yahoo if they resisted.
One might well criticize Yahoo for designing their systems in such a way as to be vulnerable to such foreseeable attempts to gather information on journalists and dissidents.
I think it is a mistake to trust such potentially damaging information to any company like Yahoo, Google, AOL, etc. International law will be a cold comfort if you are sitting in a jail somewhere. The only real solution is to take control of your own information. Use encryption, and anonymity to ensure that your information can not be handed over.