Google has come under fire regarding its recent move to set up a server in China. While many see this action as bowing down to a tyrant, I for one applaud their decision.
Here is the current situation: Chinese residents more or less have access to the Google.com server, completely unfiltered by Google. However, Chinese ISPs have been creating complications, and the availability of Google.com to Chinese citizens is unreliable due to factors outside Google’s control. Google could only work around these problems by providing a server on Chinese soil. As a result, this server would be subject to all of the local laws of the land, including the self-censorship laws.
So Google basically has two options: either continue to provide Chinese residents with an unfiltered but unreliable service, or provide a reliable service that makes as much information available to the Chinese residents as it can by law and notifies the user whenever something has been filtered, all while still making the completely unfiltered Google.com service available as before.
The question ultimately comes down to whether Google should maximize the information it makes available to the Chinese residents or hold out on them due to principle. As Google has relatively little influence in China (compared to most of the free world), a boycott of China would have little or no effect. It seems to me that the action that most benefits the people of China is to provide them with as much service as Google can, which unfortunately is not perfect.
Change in China will not likely happen due to boycotts, but by the people of China learning what it means to be free. The more exposure the Chinese citizens gets to the Internet, the more pressure it will put on the ruling party to let go of their stranglehold on the people. Google is trying to give as much information to those people as they can, and will no doubt push further as their influence grows. This decision is not hypocrisy; rather, it is more in line with their promise than perhaps anything they have done before: to make all the world’s information universally accessible. The Chinese government has been fighting to keep Google from doing this, and Google is now fighting back.
Edit: It is worth noting that Google has promised to not keep on Chinese soil any information which could be used to incriminate users under Chinese law.
Edit: Here is a nicely-written article on this subject: Google founders grow up — just like the rest of us.