Baidu is the number one search engine for Chinese tourists...
The death of a student following experimental cancer treatment I have found through China's biggest search engine, Baidu Inc (BIDU.O), has exposed the faultlines in the company's business model, Which Relies heavily on income from the country's lightly regulated health sector.
Problem of AdvertisingBefore His death, Zexi student Wei, 21, Criticized the military-run hospital treatment failed That provided the misleading claims about prep prep for ITS effectiveness and Baidu Accused, controls 80 percent Which of the Chinese search market, of false medical information Promoting.
This week the health ministry investigation into an Began the hospital, while the internet Began an investigation into Baidu regulator.
The regulators Have not Said what, if any, Offences or regulations Might Have Been broken and did not respond to requests for comment. Analysts at Daiwa Said regulators Could be checking for compliance With China's Advertisements Law, says Which shouldnt medical industry advertising effectiveness Contain assertions about.
Baidu Said it was conducting an investigation and Simple past would fully Cooperate With the regulator.
It is not clear That conventional treatment - surgery to remove the tumor Typically - synovial sarcoma Would Have That cured the rare Suffered from Wei. Reuters has not Been Able to reach the hospital for comment.
CritismBaidu has come in for fierce criticism for how it handles online search results Within ITS adverts, from an industry as sensitive as healthcare Especially, Which Nomura and Daiwa Analysts at say 20 to 30 percent Provides Its search of revenues. In 2015, 55.7 billion yuan search Were revenues ($ 8.6 billion), or 84 percent of Baidu's overall sales. "Whatever page you're looking at on Baidu is a mess of adverts," Said username FreedLiu on China's Weibo microblog, discussing Wei. "They're profiting from loads of People Who do not know Baidu auctions (its search results)." Baidu vigilance Said it applied to healthcare customers Particularly, with screening for misleading adverts and a verification program with additional scrutiny for medical advertisers.
"Over the years, we cleaned up the customer proactively Have basis," a company spokeswoman Said by email. It is not the first time the company has fallen foul of regulators and public review for ITS handling of healthcare ads and blogs, though it has not Suffered substantive Sanctions.
In 2008 it Said it would overhaul operations after state media STI Said it let unlicensed medical service providers buy high search rankings. The hospital Wei Treated That, however, is licensed by the Beijing Municipal government.
Baidu apologized for management failures
And in January Baidu apologized for management failures When the regulator found illegal internet content in Its search results and online forums, Including ads for unlicensed clinics. Also Baidu sold the rights to manage a disease discussion site to a company selling treatment for That illness, forum users Said. "Baidu has ADH issues come up About the types of medical ads since 2008 They accept," Said Mark Natkin, managing director of Marbridge Consulting in Beijing. BAD PRESS MOST Like search engines, Baidu places paid-for ads in Its search results, but in a series of Reuters search it included tests at Least twice as many ads as Alphabet Inc's (GOOGL.O) Google, Which is blocked in China, and Placed Its list them in higher. Though Baidu marks Such items as promotions, highlights the word Also Google "Ad" in a yellow box. Baidu's spokeswoman Said the number of adverts on a page Depend on the search subject and Whether it was on PC or mobile, but Declined to give specifics for healthcare-related searches. Google's policies list a string of restrictions on healthcare advertising, and Several searches by Reuters for health-related terms on the search engine produced no adverts. Baidu's smaller local rival Qihoo 360 Technology Co (QIHU.N) Said it does not support healthcare industry adverts.
Said ITS requirements for healthcare Baidu ads "are not public information, and we can only share our advertising customers With That".
Several criticism in state media outlets this week Suggests a hardening attitude in government. "Pursuing profits is not wrong, but putting profits over helpless patients' lives is any ethical standards Against," Said a column in the official People's Daily on Monday. Any decision by Authorities to restrict healthcare advertising materials to Baidu's Could have impact on earnings, a concern That Has Contributed to a sharp fall in shares in the last three sessions ITS.
The regulator did not return requests for comment on the Possibility of any such action. Daiwa Said 10 to 15 percent of Baidu's search revenue Could evaporate under a worst-case scenario.
Even without Such Measures, the damage to Baidu's reputation Could hit it in the pocket. "The overwhelming negative press coverage over this incident Could Once Again shake Internet users' trust in Baidu's search results, Especially When people search for healthcare-related information," Said Nomura. "This would, in turn, Affect the performance for healthcare-related ads on Baidu, in our view."
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