State Media Targets Baidu Over Counterfeit Drug Ads

Last scandal hurt stock, resulted in layoffs and overhaul

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Chinese search giant Baidu may be in trouble.  China Central Television (CCTV) – which is state-owned and easily the country’s largest broadcaster – has accused the company of allowing sites that deal in counterfeit drugs to buy ads.

As explained by Reuters this morning, "CCTV reported on Sunday that Baidu and other search engines had profited from promoting three websites offering counterfeit drugs that had duped more than 3,000 people in China."

Then here are a couple more important details: "In 2008, CCTV aired a similar expose on Baidu selling links to unlicensed medical sites with unproven claims for their products. . . .  As a result of the scandal, Baidu had overhauled its operations and sacked staff involved."

And it looks like the situation is starting to deteriorate this time, too.  Baidu’s stock has already fallen 3.89 percent on the stock market this morning, even though the Dow’s up 0.43 percent, the Nasdaq’s up 0.57 percent, and Google’s up 0.06 percent.

(Google doesn’t at this point appear to be part of the "other search engines" group, by the way.)

It should be interesting to see how the case proceeds, then.  This could give Google at least a slight temporary advantage, making the American company look like a safer alternative to Chinese searchers.

State Media Targets Baidu Over Counterfeit Drug Ads
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