Unfortunately they already did. See http://en.wikipedia.org/wiki/Shi_Tao for the details. Long stories short: Yahoo's Hong Kong arm gave private emails to the Chinese government which resulted a guy being jailed for 10 years. You'd better worry about Yahoo's ethics now. To date, the only mail provider I trust is Google.
By the way, demonizing anyone because s/he is from "communist China" is plain stupid. I'm pretty sure you'll get downvoted on HN.
I'm not "demonizing" anyone... you are a complete idiot. The US government would not allow this transaction to occur. That is a fact. And I'm pretty sure you're the one guy who downvoted me... and I don't really care if more downvote me because HN is quite a conformist hivemind.
BTW, I already knew about that case... and it changes nothing.
Hah buddy, as long as you're a citizen of communist china you're not going to get "Yahoo Mail" nor "Yahoo Instant Messenger"... keep dreaming.