Earlier this week, an announcement of an investigation came to light into the way Baidu presents paid search results following the death of Wei Zexi, a college sophomore. His death was caused after the pursuit of a bogus cancer treatment advertised on the site.
It seems that right now, Chinese advertising regulations reportedly don’t include search results, currently. Because this case has come to light to the public, there is now an outcry in China amid concern that Baidu has been misleading Chinese consumers since a number of people aren’t aware that the results at the top of the page are paid search advertising. Despite this ‘lack of knowledge,’ the site includes label ads in search results.
There are published reports that says that Wei Zexi had pursued a cancer treatment advertised on the Chinese search engine at a military hospital claiming they had an experimental cure developed in collaboration with Stanford Medical School. It seems that this claim was false, as there was no collaboration with Stanford, and although Wei Zexi relied on it, he underwent the treatment and ultimately passed away on April 12 of this year.
There are many Chinese who are expressing their outrage at the government for not doing more to protect consumers who are potentially confused by the accuracy or veracity of search results.
As you can see by the above chart, Baidu controls over than 70 percent of the Chinese search market. The search engine serves about 600 million monthly users as well. After the Chinese investigation began against Baidu, the company’s stock began to drop on fears that the government intervention might impact the company’s search advertising business.
Even if everything ends up working out for Baidu, their reputation has already been harmed with Chinese customers. But will this impact their market share? It could be unlikely given the lack of strength that competitors seem to be displaying against Baidu.