By launching a China-based service in January, Google agreed to actively restrict certain Web pages on the totalitarian government's behalf, a stark departure from its thumb-in-the-nose approach to, at one time or another, its venture capitalists, Wall Street and even the SEC.

Although Google has operated a Chinese-language site for several years, the site had been run from outside the country and served unfiltered content that the government then censored through its so-called Great Firewall of China. After much internal debate, Google's founders and executives made peace with the Chinese regime's demands, deciding that was best for business and, they also argue, ultimately was a way to break down the oppressive speech restrictions.

Yahoo, which also operates in China, has come under even more intense fire for its apparent role in the jailing of two activists. The cases, which have been publicized by the human rights groups Reporters Without Borders and Amnesty International, have also sparked bipartisan criticism in Washington.

"I don't like any American company ratting out a citizen for speaking out against their government," Rep. Tim Ryan, an Ohio Democrat and member of the House Human Rights Subcommittee, told Reuters last week. The committee is holding a hearing on Feb. 15 on the activities of U.S.-based Internet companies in China, and lawmakers have said they intend to push Yahoo to reveal what information it has provided to the Chinese government.

It's easy to take an absolutist stance and condemn Google and Yahoo for their decisions to do business in China given the strict censorship. But to stay out would mean compromising the service they provide to the world's second-largest Internet audience. (If Google didn't agree to self-censorship, the Chinese government's Great Firewall would do the censoring, and that firewall greatly slows down the speed of the Web.) For companies whose missions are all about open information, but which need millions of satisfied users to keep their advertising engines running, this was a tough call.

Then again, the serious privacy concerns outlined above -- namely, that Google and Yahoo know all and see all -- now come into play for China's 1.3 billion citizens, whose government is not as mindful of rights and legal processes as our own.

Google co-founders Sergey Brin and Larry Page may be young tech geeks but, make no mistake, they are also shrewd businessmen. They are visionaries too, with a grand mission to organize all the world's information and make it accessible.

Yahoo's leaders have a similarly broad vision, which they summarize with the acronym FUSE, for "find, use, share and expand all human knowledge."

No ordinary dot-com enterprises, these are powerful global juggernauts whose actions matter, whose products increasingly define how we experience the Internet.

Brin and Page tend to beg forgiveness, not permission, when pursuing their bold ideas, as was the case in 2004 when they launched Gmail, a free e-mail service that automatically scanned the contents of messages to display relevant ads. Despite complaints by privacy advocates, the duo did not back down, insisting that the novel features and massive free storage capacity would win over users. They have. Gmail accounts are in high demand, and are now being offered in a trial version to schools and businesses.

Still, the Google guys' penchant for pushing boundaries and challenging the status quo may make them party to landmark legal struggles in coming years, perhaps reaching as high as the Supreme Court.

Locked in a fierce battle for supremacy on the Internet, Google and Yahoo are innovating at a dizzying pace, in fields ranging from advertising to video search to artificial intelligence, biology, energy, even space exploration. Yahoo is aggressively researching new forms of online communities to engage its enormous audience of 420 million registered users, such as the free photo sharing site Flickr. Google, meanwhile, is busy scanning millions of library books without regard for traditional copyright laws, and it has quietly embarked on a project with maverick scientist Craig Venter to build a database of genetic and biological information.

Funding this race is a robust online advertising business that generates billions of dollars in yearly revenue for each of the companies. In order to deliver the best-performing ads, the firms will strive to learn and anticipate our wants, needs and aspirations. And that probably means tapping into our surfing habits, search histories, personal preferences and more.

How do we balance the admittedly impressive features that Google and Yahoo provide, on the one hand, and cherished notions of personal privacy on the other? There are small steps users can take to minimize the digital dossiers that these companies can amass -- for example, clearing "cookies" from Web browsers every so often, or using different sites for search and for e-mail. But the lead must come from the firms themselves.

Tomorrow's Internet will be far more interesting than today's -- which is why it is critical for the leading search engines to work out industry-wide privacy standards sooner rather than later. They can start by resisting unwarranted requests for data, appointing internal "chief privacy officers," and being more forthcoming about what information they record and share with third parties.

Until that day, and probably for as long as they are around, Google and Yahoo will know a lot more about us than we know about them.

Mark Malseed is coauthor of "The Google Story: Inside the Hottest Business, Media and Technology Success of Our Time," an international bestseller that is being published in 17 languages worldwide. Formerly the researcher to Bob Woodward for the books "Plan of Attack" and "Bush at War," Malseed contributes to numerous online and offline publications, including The Washington Post.