According to this article, Baidu shares sank because of the unreliability of medical ads it features. This to me brings up an interesting question of responsibility of information. Just like Google, the main page has no ads... but I cannot remember a time when Google's reputation was harmed when there were unreliable sites or ads on the side of the page.
NEW YORK (AP) -- U.S.-traded shares of Chinese search engine operator Baidu.com Inc. sank Monday -- a drop one analyst attributed to a report by China's state television network that Baidu may have let unlicensed health clinics buy popular medical ad keywords on its search engine.
American Depositary Shares of Baidu fell $45.11, or 25.2 percent, to $133.78 in afternoon trading. Earlier, the stock traded as low as $130.51 -- its cheapest price since May 2007.
Sterne Agee & Leach analyst James Lee said Monday that a report by CCTV over the weekend into medical malpractice in China indicated some consumers may have found their way to improperly licensed or unlicensed private clinics and health centers via advertisements that came up when they searched for health-related topics on Baidu.
Baidu, which holds a 70 percent share of the search market in China, removed the ads for medical practitioners that were considered questionable over the weekend, Lee said.
He sees the report as hurting Baidu's reputation, but doesn't think it will be hurt financially as much as Monday's share price decline seemed to indicate. Lee doesn't think health-related ads make up that much of the company's total advertising.
"The stock is obviously overreacting," he said.
In a client note, Piper Jaffray analyst Gene Munster said the questionable ads on Baidu "were typically selling drugs; we do not believe these are fake drugs per se, but were being sold through non-accredited medical Web sites that should not score as high on sponsored results."
Munster said that Baidu acknowledged in an online statement that this is true and that it has to put more focus toward sales practices, not just its technology.
He thinks the company will see a financial impact, but believes it will be "less than one would expect."
A Baidu spokesman could not immediately be reached for comment.
http://biz.yahoo.com/ap/081117/baiducom_mover.html?.v=1
Subscribe to:
Post Comments (Atom)
1 comment:
from wikipedia article on Baidu:
"Baidu started with a popular music search feature called "MP3 Search" and its comprehensive lists of popular Chinese music based on download numbers. Baidu locates file formats such as MP3, WMA and SWF. The multimedia search feature is mainly used in searches for Chinese pop music. While such works are copyrighted under Chinese law, Baidu claims on its legalese page that linking to these files does not break Chinese law.
Chinese government and industry sources stated that Baidu received a license from Beijing, which allows the search engine to become a fully-fledged news website. Thus Baidu will be able to provide its own reports, besides showing certain results as a search engine. The company is already getting its news department ready. Baidu is the first Chinese search engine to receive such a license."
--- i was wondering how much the Chinese government regulates Baidu, compared to the rest of the internet in China? since search engines seems to be a faith-based system [which Baidu obviously just violated], will Chinese internet users start to significantly question the reliability of other previously-trusted sites and advertisements now?
Post a Comment