Earlier this week, Chinese government officials announced an investigation into the way Baidu presents paid search results following the death of college sophomore Wei Zexi. He died after pursuing a bogus cancer treatment advertised on the site.
Chinese advertising regulations reportedly don’t currently include search results. The case has sparked an outcry in China amid concern that Baidu is misleading Chinese consumers because many people may not be aware that results at the top of the page are paid search advertising. However, the site does label ads in search results.
According to published reports, Wei Zexi pursued a cancer treatment advertised on Baidu at a military hospital that claimed an experimental cure developed in collaboration with Stanford Medical School. That was a false statement (There was no collaboration), but Wei Zexi relied on it, underwent the treatment and died on April 12 this year.
Many Chinese have expressed anger at the government for not doing more to protect consumers who may be confused by the accuracy or veracity of search results.
Baidu controls more than 70 percent of the Chinese search market and serves roughly 600 million monthly users. News of the Chinese investigation caused Baidu’s stock to drop on fears that the government intervention might impact the company’s search advertising business.
At a minimum, Baidu’s reputation has been harmed with Chinese consumers. Despite this, Baidu’s market share is unlikely to suffer given the relative weakness of its competitors.
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