State media accuses Baidu of promoting fake drug sites-report

SHANGHAI, July 19 (BestGrowthStock) – China’s main state-run
television station has accused the country’s top internet
search engine Baidu Inc (BIDU.O: ) of directing users to websites
that sell counterfeit drugs, the People’s Daily reported on
Monday.

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, said the
newspaper, the mouthpiece of the ruling Communist Party.

Baidu declined comment on the report. In the second
quarter, Baidu had a 70.8 percent share of China’s search
market, according to iResearch data.

A source familiar with the situation told Reuters on Monday
that the sites exploited a loophole in the system, piggybacking
on legitimate websites to gain access to buy keywords. The
source could not be identified due to the sensitivity of the
matter.

In 2008, CCTV aired a similar expose on Baidu selling links
to unlicensed medical sites with unproven claims for their
products. The company’s Nasdaq-listed shares subsequently fell
more than 20 percent and its fourth-quarter earnings were hit,
prompting Baidu Chief Executive Robin Li to publicly apologise.

As a result of the scandal, Baidu had overhauled its
operations and sacked staff involved.

In the last few years, China has been beset by a series of
product safety scandals ranging from tainted milk to fake
pharmaceuticals.

The government has announced several crackdowns but the
problems persist, aided by a lack of surveillance, generally
poor quality standards and corruption.
(Reporting by Melanie Lee; Editing by Chris Lewis and Anshuman
Daga)

State media accuses Baidu of promoting fake drug sites-report