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Chinese regulators restrict Baidu healthcare advertising

Search engine faces clamp down after death of cancer patient

Baidu 

Chinese regulators have told the country's largest search engine to tighten-up its approach to healthcare advertising after the death of a student. 

Baidu has been told that its search results have been compromised by its commercial practices and that, as part of a swathe of remedial actions, it must now limit marketing information to no more than 30% of each web page.

Wei Zexi used an experimental cancer treatment he found via Baidu and, before he died at the end of April, took to social media to criticise the firm and the hospital responsible, according to the Xinhua News Agency

As his health deteriorated he reportedly used Q&A website Zhihu, which works in a similar way to Quora, to accuse Baidu in February of being least partly to blame.

In the wake of the growing controversy several regulators, including the Cyberspace Administration of China (CAC), demanded Baidu change its advertising practices, noting that the public are likely to be misled by the search results they find on Baidu.

Following a meeting between Baidu management and the Cyberspace Administration of China, the State Administration of Industry and Commerce and the National Health and Family Planning Commission, the firm was told it was too reliant on profits from paid listings.

The regulators also noted that paid listings were not clearly labelled as such, therefore compromising the objectivity and impartiality of all Baidu search results.

Healthcare advertising accounts for 20-30% of Baidu's search revenue - with search marketing representing around 85% of its total sales.

Commenting on the marketing information limit Mark Natkin, managing director of Beijing-based Marbridge Consulting, told Reuters: "If they do enforce that, it would likely significantly cut into revenues."

The regulatory authorities have requested a number of other remedial measures, including changes to the online marketing services Baidu provides to medical, pharmaceutical and health businesses.

They also want a ban on working with medical organisations that do not have the “requisite qualifications from competent regulatory authorities”.

Baidu will have to change its existing auction-based paid search practices, including using the 'credibility' and 'reputation' of those listed as major factors in determining its results.

The firm said it would also have to indicate clearly which search results are marketing information and the “associated risks” of accessing them. 

In a statement Baid said it “has taken and will continue to take measures to comply with these requests from the regulators … [and] intends to set aside 1.0 billion Chinese Yuan for the purpose of compensating users who establish they were harmed by fraudulent marketing information”.

18th May 2016

From: Marketing

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