I don't identify as an absolutist and I agree it's not a black-and-white situation. It sucks for the reasons you mention.

But even if it's their legal obligation to follow, I still believe it's morally wrong for them to do so. Their position isn't so weak that they're powerless. As a business their incentives may be really strong, but I don't believe that absolves them of the moral component. Just because taking a hard stance is hard doesn't mean it's OK not to take it. But it is understandable, certainly for a complex, multifaceted organization.

And I agree, it's not just about Google. I think everyone shares at least some responsibility, from the government to the businesses to the citizens. But just because it's practical for Google to censor doesn't mean they are no longer morally responsible for taking part in censorship.

Hopefully Google will at least be active in fighting the laws and maybe that is their full intention.

I don't think it helps to talk about censorship in the abstract. We can start with the position that "all censorship is bad", but we quickly get into the same tricky problems that first amendment cases do (where do my rights end and yours begin), not to mention that "free speech" is literally defined differently in different countries.

Next, we can look at things like if censoring certain types of material is ever wrong. Citizens reporting on each other for anti-patriotic behavior horrifies us, but I have no problem with Google reporting a site that hosts child pornography if they discover it while indexing images (I don't agree with the thoughtcrime laws that child pornography seems to engender, but I certainly have no problem with that site being shut down).

Since we're looking at an American company, what about DMCA take down notices? Many on this site have serious problems with the way those laws are enforced and in how they favor large content conglomerates, but if companies were to not follow them, large segments of companies on the internet simply could not exist (if based in the US). Is it morally wrong for them to honor these takedown notices? What if most are in fact legitimate (in our copyright system, not some platonic one!), they just deny due process to some minority? Is there a moral difference between a court order and a national security notice?

There's an easy transition from these questions to ones of censoring hate speech and incitement to violence, to censoring Holocaust-denial and Nazism, to censoring criticism of the King.

If we're going to draw a bright line for companies we will financially support, we'll have to talk about specifics, because "censorship" won't cut it (what did you fund with your taxes this year?), and we really are going to have to talk about "I don't want an American company censoring blog posts in India because I think the laws there (that some portion of the population likely supports) are wrong". And then we'll have to call up someone in the EU that supports "the right to forget" and see what they think of our notion of free speech and censorship.

What, specifically, would you have them do? Are you advocating a full hard-line stance? That they will not take down anything, ever? Or that they won't take down things if they feel the reason is political oppression? Or what?

Those questions are not rhetorical. You haven't said, really, what you believe their moral obligation is, only that they are falling short of it.