Leading Chinese search engine Baidu could go out of business if it doesn’t move quickly to regain users’ trust after a scandal around health care advertising, CEO Li Yanhong, known as Robin Li, told his staff in an email.
The Cyberspace Administration of China imposed sanctions on Baidu after 21-year-old student and cancer patient Wei Zexi died from an experimental and ineffective treatment that he found on the search engine. The company has until the end of the month to rework its results so that they are no longer ranked and shown to users based on the amount being paid, include warnings of risk where needed, and limit the percentage of paid results per page.
“With the recent resentment of our users, Baidu is facing a crisis that we have never experienced before,” CEO Li Yanhong, known as Robin Li, wrote in an email to his staff. “Baidu could go out of business in just 30 days if we lose our users.”
“I see senior engineers trapped in a conflict of interest between commercial interest and user experience, and often compromising the latter,” Li added. “Users are raising questions concerning the fairness and transparency of our commercial promotion results, and complaining about commercialization of our products.”
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Baidu (BIDU) has said it would abide by the government restrictions immediately and set up a 1 billion yuan fund for other victims.
The restrictions go beyond just health care ads to cover all of Baidu’s results, a broader challenge for the company than investors had anticipated. Shares of Baidu have lost 12% over the past month amid the government probe.