In case you have never heard of Baidu, Baidu is a Chinese web services company headquartered in Beijing which offers many services such as a Chinese search engine for websites, social media services, audio files and images. This internet juggernaut is China’s largest search engine with a 70% share of the market, and frequently compared to the likes of Google.
Nevertheless, Baidu’s advertising practices has lately been under major scrutiny after a case whereby a 21-year-old student, Wei Zexi, publicly accused Baidu of promoting false medical information when he had been searching for treatment for his synovial sarcoma, a rare form of tissue cancer. Before his untimely death on 12th April, Wei had allegedly learned of a hospital in Beijing run by a division of China’s paramilitary police force named Second Hospital of Beijing Armed Police Corps offering treatment for his condition through Baidu. Wei claimed he had received distorted information on cancer treatments through a promoted search result, which caused him to criticise how Baidu handles adverts within its search results after his treatments failed.
As China is infamous for their extensive censorship system known as the Great Firewall, Chinese internet users left frustrated by being blocked by the government from search engines like Google have no choice but to resort to alternatives such as Baidu, known amongst Chinese internet users for their “unscrupulous business model”. Because of Baidu’s search algorithms which heavily favours advertisers and ranks medical information following the “highest bidder”, Wei shared his ill sentiments of allegedly being misled into falling for an experimental cancer treatment through the paid ads. According to Reuters, healthcare accounts for 20-30% of the company’s search revenue, while search revenues represented around 84% of the web services firm’s total sales in 2015.
Since the Wei’s tragic passing, China’s cyberspace regulator, China’s Cyberspace Administration has ruled that Baidu has until 31st May to start making changes to the way they display their search results; by ensuring that the search position of paid ads will no longer be based on the highest bidder, limit the size of advertisements to 30% per page, and remove offers from unauthorised providers.
The move is predicted to affect 10% to 15% of of Baidu’s total search revenue from the limitations imposed on the company’s lucrative health care advertisements. Search revenue represented approximately 80% of Baidu’s total 2015 sales and the company brought in $2.5 billion in total revenue for the first quarter of 2016 alone. Baidu’s shares have already been hit by around a 14% fluctuation since the controversy broke out.
The fault primarily lies in the way Baidu practises displaying search results laden with in-search adverts. After Wei’s death controversy, many Chinese Internet users have expressed outrage of the blurred line between a more helpful, credible link and a paid, sponsored link that allegedly misled Wei and impacted his choice of treatment. Baidu will only list paid links with a small, gray text below the link saying “tui guang” or promotion, instead of using “guang gao” or advertisement, which critics argue can be pretty misleading, especially when the sponsored links are lumped together with regular ones.
Moreover, due to the heavy internet censorship in China, the ban on Google leaves many of China’s netizens lacking for news and informational sources on the web. After his treatment failed, Wei had disclosed in his post how:
“A Chinese student in the United States helped me Google relevant information and contacted many hospitals there…Only then did we find out that American hospitals had long stopped using the technology (used in the treatment) due to poor results in clinical trials.”
In a separate investigation launched by health authorities and the military, they discovered that the hospital in question had in fact been misleading the public by by illegally outsourcing services, publishing fake medical ads and using unauthorized clinical technology.
Robin Li, CEO at Baidu
Following the uproar over the whole scandal, Robin Li, the CEO at Baidu, released a letter on Sina to his employees urging his employees to place “values before profit” in order to regain public trust, when instead the company had been making compromises just for commercial interests as well as being more concerned with earnings growth over the user experience.
In the statement Robert Li had emphasized to his employees that:
“If we lose the support of users, we lose hold of our values, and Baidu will truly go bankrupt in just 30 days!”
Now that the Cyberspace Administration of China has released a statement demanding Baidu to restructure its listing services, hopefully this would be able to prevent tragedies like Wei’s in the future.
 New York Times
 The Star
 Business Insider