The Guardian (a UK newspaper) reports that China’s leading Search Engine is in a bit of trouble. According to these articles, Baidu has lost almost 10-15% of it’s ad revenue and 60% of it’s stock value, following a scandal involving several fraudulent medical clinics with fake medical licenses.
I find it quite shocking that the search engine itself would be reprimanded for this, and have to take so much pressure. Was Baidu meant to check the licenses of all these clinics? would they need to verify and validate the legality and credibility of other entities such as law firms or even normal businesses? Perhaps there are some local policies in China where the advertising platform or engine is responsible for the content advertised. Does anyone reading here know?
I’m not so surprised about the staff involved being let go. On one level I feel it’s heavy-handed and probably unfair for the staff in question to take the brunt of it. However, from a business level when you’re in this type of scandal and the hit in revenue is undermining the value of your stock by something like 60% then you have to make drastic changes, publicly, to show that you are reacting to the problem and trying to resolve it.
I guess the winner here is Google, who’s been trying to gain market share in China for a while now…
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