Baidu, the leading Internet search engine in China, has seen its traffic decline and stock price slump since November, when a state-run television broadcast criticized its practice of displaying paid search results higher than some free ones, according to Beijing-based research firm Analysys International.
“Until Baidu can clearly demonstrate it has overcome the issues brought up by the negative media reports recently, advertisers will likely pull back spending,” said Steven Chang, chief executive officer at Optimedia China, which buys advertising from Baidu and Mountain View, California-based Google. “Google’s biggest strengths are its ‘Don’t Be Evil’ motto and the integrity of its technology, and the company should attempt to capitalize on them in China.”
Since the controversy, Baidu has taken steps to correct problems highlighted in the report on state-owned Chinese television network CCTV. It removed unlicensed providers of drugs and other medical care from its search screens and says the company is redesigning its site so that paid search results are more distinguishable from free ones, though it still co- mingles them.