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Baidu urges focus on values after paid advertising fiasco

The Cyberspace Administration of China has ordered new measures to protect consumers, following the death of Wei Zexi, a 21-year-old student who sought out a controversial treatment of a rare form of cancer among Baidu's search results. Baidu CEO Robin Li urged his staff to focus on values rather than short-term interests, and the Beijing-based search engine has been required to cap the number of ads per page at 30% after the probe found paid search results misled users. It announced to set up a Rmb1 billion ($154 million) fund for compensating customers defrauded by advertisers as well as a department that will revamp results based on user responses. The regulator also ordered the company to offer clear markers that indicate paid posts and review its medical ads, removing those that don't comply with new standards. Healthcare ads account for 20% to 25% of Baidu's search revenue, according to analysts. They say the move has the potential to hurt a key profit source for the company as advertisers won't be willing to pay as much if their search results will be pushed to the sides. The 2015 Advertising Law has a much broader ambit to enforce against misleading and harmful advertising, and cracks down harder on ISPs, medical/healthcare ads and consumer protection violations than its 20-year-old predecessor. Online platforms must thoroughly check and clean up the ads they disseminate or face civil penalties—Article 56 states: “If a false advertisement for a good or service that has an impact on the lives and health of consumers causes harm to consumers, the advertising agency, advertisement disseminator and advertising spokesperson shall bear joint and several liability with the advertiser.”

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