Baidu’s problem goes way deeper than a dead college student

Photo credit: U.S. Pacific Fleet.

If a stock price was the pulse of a company, corporate cardiologists would be a bit concerned about Baidu. Shares plummeted on Monday over concerns about what’s starting to look like a chronic condition: Baidu’s problems in the healthcare industry.

The cause of this latest blip is Wei Zexi, a 21-year-old cancer patient who died last month after a treatment he got via a hospital he found on Baidu failed to work. In a post written before his death, Wei said he was misled about the efficacy of the treatment he was being given and that Baidu was partly to blame as he had found the treatment via Baidu’s search. The post went viral, China’s net users got angry, and now China’s government says it will investigate Baidu.

Baidu has apologized to Wei’s family, and the company said it will actively cooperate with the investigation. But unfortunately for its reputation, this is far from the first time it has been involved in controversy relating to medical services and its own advertising and search ranking policies.

Baidu’s unhealthy health history

Earlier this year, Baidu was accused of selling control of some of its illness-related Tieba forums to private hospitals, which critics said could endanger users’ health (Baidu stopped commercialization of its Tieba forums in response to the controversy). But this problem goes much deeper. Concerns about Baidu’s medical advertising leading people to less-than-ideal treatments have bubbling up online from time to time for at least the past decade. As early as 2008 the company was even coming in for criticism on state television over allowing medical paid search results for treatments that might not be in the user’s best interests.

Baidu is caught between a rock and a hard place, though, because a significant percentage of its online ad revenue – 30 percent according to one report – comes from medical ads. Many of those (more than US$1.5 billion worth in 2014, according to another report) come from private hospitals. And when Baidu cracked down on misleading medical advertising last year, China’s largest group of private hospitals threw a fit, organizing a boycott and threatening Baidu and some of its other medical clients.

Baidu has always been in a difficult position.

On the one hand, I feel for Baidu here. It is, and always has been, in a difficult position. It needs to generate advertising revenue, and medical ads are a big enough part of that that it cannot simply ban them outright. But allowing medical ads at all has made the company vulnerable to criticism that it is trying to profit from misleading sick users into paying for treatments that may not help them. If Baidu tries to regulate the ads, it faces angry pushback from its private hospital advertisers, and it also faces the difficult question of how, exactly, an internet search company is supposed to effectively assess the medical legitimacy of a particular hospital or treatment. There is no easy option here, no way that Baidu could have left its users and its advertisers completely satisfied.

Photo credit: Harsha KR.

How much is enough?

But the controversy over Wei Zexi may be the biggest in Baidu’s long history of medical-ad-related controversies (Chinese tech news site Sina has even created a special section for reporting on it). And as China’s internet users discuss and reflect on Baidu’s part in Wei’s unfortunate death, they’ve got a decade of similar controversies to compare with. Since this problem apparently still hasn’t gone away, plenty of net users have already concluded that Baidu is evil, putting profits above the health of its users. It’s hard to avoid the feeling that Baidu should have done something decisive about this problem long ago, even if it meant pissing off advertisers and sacrificing a substantial chunk of revenue.

It’s not hard to understand where those skeptical users are coming from.

Now, it’s facing a pretty pissed-off internet populace. “If Google came back, I would never use any Baidu product ever again,” wrote one Guangdong-based commenter on a Sina Tech article. In fact, that may be the company’s only saving grace. “I’m still using Baidu because I don’t have any other choice,” wrote another user.

And it is true: Baidu will probably weather this storm just fine because it doesn’t have any real competitors in the search engine market, of which it controls more than 80 percent. Its next closest competitor, Google, doesn’t even operate in China anymore. Domestic competitors like Sohu and Qihoo each control less than five percent of the market and aren’t in any position to pose any immediate threat.