China’s Cyberspace Administration has ordered popular search engine Baidu to revamp its paid advertising business in light of damning claims brought against one of the listings.
After failing to properly check the profile of bidders and reportedly giving “too much weight” to paid-for posts, the site will have to ensure all future ads come with “eye-catching markers” and a risk warning.
The rule came in after an investigation into Baidu’s ad practices followed by the death of Wei Zexi, a student suffering from cancer, who had taken medical treatment found through an ad on the site.
The new measures to protect users will apply to all promotions listed on Baidu. Any illegal information will be taken down and medical institutions without regulatory approval won’t be allowed to advertise.
The new regulation also applies to Baidu’s display rules, allowing for ads to comprise only 30% of results shown on a page.
The site means what it says and during the investigation alone, 126 million paid ads were removed, a number of them coming from 2,518 medical companies.
Baidu will also set up a fund for one billion yuan ($154 million) to compensate those who suffer harm as a result of untruthful information coming from paid results.
Other changes will affect the way in which Baidu displays ads on its page, making it patently clear when a company is paying for a top placing.
Currently, the web company places small grey wording saying ‘promotion’ at the bottom of an ad. Some say this misleads people and should be replaced by the word ‘advertisement’ to denote a more obvious billing.
Sponsored results must also be separated from organic entries, ruled the Cyberspace Administration. Most other search engines prominently mark ads and the recommended changes will ensure Baidu does too.
The new rules are set to hit Baidu straight on the bottom line, with healthcare ads accounting for 20-25% of its search revenue.
“These measures may hurt our company’s revenue but we have to take decisive actions because, we believe, this is the right thing to do,” said Robin Li, chairman of Baidu Inc.
Zexi’s death caused anger and criticism among users, some of whom claimed that state media as health information online wasn’t clear, whilst lamenting China’s preference for results delivered by only one search company.
Baidu is also one of the country’s main source of medical information, as people prefer to turn to online forums rather than read whitepapers available via databases.
Wei Zexi browsed the web looking for the right treatment for his rare form of cancer, and he sought help at a military hospital in Beijing fed back by Baidu search results.
"The tragic death of Zexi has caused a huge social impact and also deeply touched Baidu. It has prompted all of us to re-examine our responsibility as a search engine company," said Xiang Hailong, the internet giant’s top search executive.
The investigation into Zexi’s death revealed that his medical choice was influenced by Baidu’s keyword pay-for-placement services. as the company’s search algorithm does not allow for objective and unbiased results, which misleads users.
In a separate inquiry into the hospital that treated the student’s cancer, health authorities and the military found it had misinformed people publishing fake ads and illegally outsourcing services.
Baidu agreed to change its algorithm and the Cyberspace Administration stated that Beijing will soon publish regulations tightening search and online ad management.