Here's the github term from their ToS that tells users to comply with local law.
Github doesn't think that Github is a dumb pipe. Github wants people in oppressive regimes to censor their projects.
https://help.github.com/articles/github-terms-of-service/
> You may not use the Service for any illegal or unauthorized purpose. You must not, in the use of the Service, violate any laws in your jurisdiction (including but not limited to copyright or trademark laws).
Github doesn't want you to insult your employer if you were working in UAE. Github doesn't want you to insult various ruling families if you live in eg Kuwait.
"Supposed" by whom?
Arguably, they might be analogous to a common carrier with regard to their paid services. Their free services appear to be provided on the basis of mutual benefit -- the consumers of those free services get the services, Github gets the promotional benefit of hosting the services.
At least in the case of the latter, Github has a clear incentive to view the exchange differently when the content exposed by the repositories in question is, in Github's view, inconsistent with the image that Github wants to present, and seems to me to have a clear moral right to decide whether or not to make the exchange in consideration of that basis, among other factors.
This is your projected mission. They've never claimed they should, would or even CAN do this. Feel free to find another vendor in the marketplace that will continue to allow you to protect racial slurs on the dubious mask of free speech.
But it's worth noting the case in question WAS just "throw some slurs around because we're just massively insensitive."
That's not actually the issue at hand. Github isn't actually supposed to communicate anything at all on their site, good or bad. They're supposed to act as a platform and a common carrier for others. This requires that they not be subject to a heckler's veto, as anyone can understand if they stroll down to a university campus and look at what happens when an unpopular political group attempts to hold a meeting in a classroom (eg: they get blockaded and shouted down by hecklers).
And by "unpopular", I don't mean "Hey let's throw slurs around for the lulz", I mean, "Anything to do with the Middle East, or the Radical Students' Union, or the Campus Republicans, or anything to do with the Middle East."