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Alex,
I am aware that google, yahoo and the rest can do as they please within the limits of the law. They do give warnings in some cases that you are entering an area that will have adult content. I do NOT see it in their business interest to filter out search results, and totally omit them in a country where it is perfectly legal to display the results.
In China it is illegal therefore the results are filtered out. In a market like the US, it is legal and a search engine can profit from it. It would be very hard to convince them to do otherwise when profit motivation is involved.
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