Yahoo could face a fine, a civil lawsuit, or both if it is found to have illegally divulged personal data used to put a Chinese journalist in jail for 10 years.
On Thursday Hong Kong legislator Albert Ho filed a complaint with the government on behalf of convicted Chinese journalist Shi Tao and a friend who travelled to the city. They argue that a Hong Kong company has no reason to comply with a Chinese request for information, and requested that Hong Kong's Office of the Privacy Commissioner for Personal Data investigate the matter.
Tao, formerly an editorial department head at Contemporary Business News in China's Hunan Province, was convicted last year of divulging state secrets by Beijing in part due to an email Yahoo handed over to Chinese authorities that contained a government warning for commissars to be on guard for dissident activity ahead of the 15th anniversary of the Tiananmen Square massacre.
"We are still looking into the facts to decide if we will carry out a formal investigation," said Shirley Lung, a spokeswoman for the privacy commission. The agency is required to answer the complaint within 45 days, she said, adding that it will try to decide whether or not to move forward on this issue "as soon as possible".
Although a ruling by the privacy commission is not necessary for a civil lawsuit in Hong Kong, any censure of Yahoo Hong Kong would greatly help a civil case against the company. Any Hong Kong government fine or other penalty would only be applied to Yahoo after a privacy commission warning was issued. If the company failed to heed the warning and change its business practices, a penalty would be imposed.
Yahoo denied any involvement in the case by its Hong Kong arm.
"Yahoo Hong Kong was not involved in any way in the disclosure of information in Mr Tao's case," said Mary Osako, a spokeswoman for Yahoo at the company's California headquarters, adding that it was Yahoo's China unit that complied with the order.
She was not immediately able to identify where the servers that contained Tao's email data were located.
Yahoo has argued that it was only following Chinese law when it provided evidence that helped land Tao in jail, but the incident, along with other freedom of expression issues related to US companies, has sparked a wave of indignation among US lawmakers.
In February, Representative Christopher Smith introduced legislation that would bar US internet companies from locating web servers inside "internet-restricting" countries such as China, with stiff penalties for those that don't comply. The bill says US technology companies have succumbed to pressure by authoritarian foreign governments, and are failing to uphold their corporate responsibility to protect and uphold human rights.
The bill would make it harder for foreign governments to force companies to turn over customer information by keeping the servers containing the data outside their borders. But it wouldn't be an easy task for companies to comply with. China, for example, maintains firewalls and censors that significantly slow the transfer of data from offshore servers, making it important for companies to keep them inside the country. But placing servers in China gives authorities greater control over company activities and far easier access to user data.
Representatives from Yahoo, Google, Microsoft and Cisco were all lectured by US lawmakers in a February meeting for failing to uphold free expression in China. The lawmakers harangued Yahoo over Tao; Google for censoring results at its China search engine; and Microsoft for removing from MSN Spaces a blog written by a Chinese journalist. They also questioned Cisco on whether or not it is helping the Chinese government block access to some websites by selling it network management equipment.