Yahoo and Microsoft are in the process of drafting a voluntary code of conduct for doing business in China and other countries that have restrictive Internet policies. The two companies are working alongside a handful of other Internet companies and human rights groups to develop the code, and plan to have a completed version available later this year.

Plans for the code were first revealed this past March, when Microsoft, Yahoo, and Google announced that they were working with Human Rights Watch to "minimize complicity" with the restrictive policies that China and other countries have placed on Internet use. The companies would still play by China's rules, but they would not go any further than those rules require. Perhaps surprisingly, some companies do, in fact, go further in censoring the Internet than the Chinese government requires, trying to anticipate ahead of time which sites are being targeted by the Great Firewall.

The latest update on the code came out of an inquiry from Senators Richard Durbin (D-IL) and Tom Coburn (R-OK), who had expressed concern that the Chinese government might pressure the companies to hand over information about users who are currently in China for the Olympic Games. The two Senators had asked Microsoft and Yahoo for an update, which prompted them to respond in a letter that they were working on the code, according to the Wall Street Journal.

No specifics were given on what the voluntary code will entail just yet, although it will reportedly cover "principles of freedom of expression and privacy" in China and other countries that censor the Internet or are known for requesting information about users.

Yahoo, Microsoft, and Google have been under fire in the past for complying with China's controversial Internet policies. Microsoft and Google were criticized by Amnesty International in 2006 for agreeing to censor their search results within China so that forbidden topics would not be available to citizens, and Yahoo was slammed for handing over personal information of numerous Chinese dissidents. Other human rights groups and even Congress have made it clear that they consider Yahoo's actions unacceptable too.

This has prompted the introduction of a bill, the Global Online Freedom Act, that would bar US companies from disclosing personally-identifiable information about a user, except for "legitimate foreign law enforcement purposes." If the companies violate the restrictions, they could face civil and criminal penalties of up to $2 million, and aggrieved citizens (those who have suffered from the companies' violations, like the Chinese dissidents discussed above) are free to pursue punitive damages and other legal remedies from the offenders. Until such legislation is passed and goes into effect, it's up to companies doing business in China to decide how they wish to conduct themselves.