From an Information Week article:
MSN uses a filtering system similar to the one used by the peer-to-peer file-sharing program Kazaa, which identifies titles and metadata to effectively block pornographic and erotic images. Yahoo uses a system that requires users to designate specific words to be blocked, which GAO contends still lets porn sneak by. The GAO did not provide details on Google's filtering technology but said it was not as effective as MSN's system.
"When searching Google using a known search word, we were able to download 79 images, of which 11 were adult erotica," Linda Koontz, GAO director of information management issues, wrote in a 74-page report. "Similar to [peer-to-peer site] Morpheus' filter, Yahoo's filter was largely ineffective in blocking pornographic and erotic images."