Internet giant Yahoo has been accused of supplying information to China which led to the jailing of a journalist for "divulging state secrets".
Western internet firms are rushing to invest in China
Reporters Without Borders said Yahoo's Hong Kong arm helped China link Shi Tao's e-mail account and computer to a message containing the information.
The media watchdog accused Yahoo of becoming a "police informant" in order to further its business ambitions.
A Yahoo spokeswoman said it had to operate within each country's laws.
"Just like any other global company, Yahoo must ensure that its local country sites must operate within the laws, regulations and customs of the country in which they are based," said Mary Osako.
Shi Tao, 37, worked for the Contemporary Business News in Hunan province, before he was arrested and sentenced in April to 10 years in prison.
According to a translation of his conviction, reproduced by Reporters Without Borders, he was found guilty of sending foreign-based websites the text of an internal Communist Party message.
Reporters Without Borders said the message warned journalists of the dangers of social unrest resulting from the return of dissidents on the 15th anniversary of the Tiananmen Square massacre, in June 2004.
The media organisation accused Yahoo of providing Chinese investigating organs with information that helped link Shi Tao's personal e-mail account and the text of the message to his computer.
"We already knew that Yahoo! collaborates enthusiastically with the Chinese regime in questions of censorship, and now we know it is a Chinese police informant as well," Reporters Without Borders said in a statement.
Western internet companies have regularly been criticised for agreeing to China's strict rules governing the internet, which Communist Party leaders fear could be a tool to spread dissent.
Microsoft was criticised in June for censoring what bloggers write.
The companies say they have to abide by local regulations, and point out that since China is set to be the world's biggest internet market, they cannot ignore it.
"Microsoft works to bring our technology to people around the world to help them realise their full potential," said a Microsoft spokesperson.
"Like other global organisations we must abide by the laws, regulations and norms of each country in which we operate."
Earlier this month Yahoo paid $1bn (£556m) for a stake in China's biggest e-commerce firm, Alibaba.com.