Bad News for Baidu

Just a few days ago, Baidu — a Chinese Internet search engine — announced that it will be restricting the number of sponsored search by 30% and pumping a ton of money into fraud prevention. The decision to do this is because Wei Zexi died after seeking out controversial treatment advertised among search results. The Cyberspace Administration of China stated that the treatment Wei used resulted from people abusing sponsored search. Baidu must review and amend its medical advertising to meet new standards. However, the change has potential to devastate Baidu. The company makes 20-25 percent of its revenue from health-care ads. Furthermore, the companies paying Baidu may start to be pushed to the side because of the new rules. As a result, they will not be willing to pay as much and Baidu will suffer.

Usually, it seems that the best product would rise to the top of the advertising because they would have the most money to bid the highest for the advertising spot. But, for Baidu it seems that someone had abused that system as a way to get their harmful product on the search results. Previously, it seems as if Baidu would take the highest bidder and give them the slot, regardless of product quality or safety. The new restriction on sponsored search will hopefully weed out people trying to exploit the system that Baidu had in place and make advertising safe again…and if not, things are not going to be pretty for Baidu.

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