Yahoo’s apology and financial settlement with the families of two prisoners in China are warnings to American business. Ethical behavior does not begin and end with the law.

That is not a lesson confined to China, but it may be easier to see through a Chinese lens. In China, the state reserves the right to control information. A U.S. company that offers Internet service there has to follow China’s rules. One rule is screening out anti-government messages from Internet search requests. Type in “Tiananmen Square” to google.com and google.cn, its Chinese page, and you will get politically different results. Some such compromises are necessary to operate in China. It is better for Yahoo to offer a service that is 90 percent of the real thing than zero – better for Yahoo and better for China.

But it cannot be right for a business to join in the political persecution of its customers.

The Yahoo case concerns Wang Xiaoning and Shi Tao. Wang, an engineer in Manchuria, used an anonymous Yahoo e-mail account to post an argument against one-party rule in China. Shi, a business journalist from Hunan Province, used an anonymous Yahoo account to publicize rules for censorship of the press. In both cases, Chinese authorities demanded that Yahoo divulge their identities, and it did. Wang and Shi are both serving 10-year terms in Chinese prisons.

We do not argue that it is the purpose of Yahoo and Google – or Microsoft and Boeing, for that matter – to promote democracy in China. They are economic enterprises. But they should not retard democracy, and they should find ethical ways to treat their customers.

The stink that has been made of the Yahoo case is a good thing. The company’s CEO, Taiwan immigrant Jerry Yang, was hauled before the House Committee on Foreign Affairs earlier this month and berated by Rep. Tom Lantos, D-Calif. Yang apologized, and now says Yahoo is “committed to making sure our actions match our values around the world.”

That is not always easy, but it is necessary. And in the long run, the Chinese people will remember it.