Baidu’s Reputation Stained By Unlicensed Medical Product Supplier Ads

Posted Nov 19, 2008, Inc. (NASDAQ:BIDU), also known as “The Google of China” has been doing very well since they launched in 2002.   CCTV, a government-controlled TV network in China has reported that allowed unlicensed medical supplier companies to win keyword auctions for higher rankings on search result pages.  Ever since CCTV reported this news, Baidu’s shares have been dropping.

“There’s a very low tolerance for anyone that seems to be involved in exposing consumers to health risks in China,” stated Citigroup analyst Jason Brueschke [AP].

In response to the controvery, Baidu CEO Robin Li stated that all medical, beauty, and diet products must now show licenses before returning back to Baidu’s paid search ad results.

Baidu was also hit with controversy last year when the media reported that the search engine company supposedly repressed information about a tainted milk scare in China.  Baidu responded by saying that dairy company Sanlu Group asked to exclude scandal news from search results, but they refused.

“We are doing this because we care. It is important to us. We want to be a responsible corporate citizen,” stated Li. “If I had to speculate, our traffic will be negatively affected in the short term.”