The company has now been ordered to clean up in-search healthcare adverts, and the positioning of paid-for search adverts of any kind can not be based only on the highest bidder. Paid-for promotions should not consist of more than 30% of search results per page, and they should be more clearly marked as ads.
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They found Baidu’s search results did influence Wei’s choices of medical treatment, and specified areas in which Baidu needs to change.
In a statement, Baidu, which makes the majority of its revenue from paid advertising, said it would “implement all the changes demanded by investigators”.
The outcome is that Baidu will have to vet medical, pharmaceutical and other healthcare related products and services more carefully before featuring them in search results.
Baidu said it will set up a CNY 1 billion (USD 150 million) fund to compensate users who suffer verifiable economic harm as a result of fraudulent information found in paid results, the statement said.
Beijing’s verdict is “worst than worst-case scenario”, according to Nomura Securities’ Jialong Shi, who has a Neutral rating and $187 price target on the stock.
Although Baidu can still advertise healthcare treatments the move still comes as a blow to the company, which has managed to maintain good government relations amid a broader crackdown on Internet media since President Xi Jinping came to power in early 2013.
Chinese regulators have imposed limits on the number of healthcare advertisements carried by Internet search giant Baidu.
Before his death, student Wei Zexi, 21, criticised the military-run hospital that provided the failed treatment for misleading claims about its effectiveness and accused Baidu, which controls 80 percent of the Chinese search market, of promoting false medical information. The public are likely to be misled by search results on Baidu, the CAC said.
Among the new rules announced yesterday: The company must overhaul its system for ranking search results so they’re not determined exclusively by how much advertisers have paid, and are instead ranked primarily by credibility.
Baidu was also ordered to streamline its commercial services regarding the medical industry.
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Baidu said when the inquiry started it was also conducting an investigation and would fully cooperate with the regulator.
