Cyberspace Administration of China Joint Investigation Team Releases Findings on Baidu; Baidu Pledges Full Compliance with Rectification Measures

On May 9, the Cyberspace Administration of China (CAC), in conjunction with the State Administration for Industry and Commerce (SAIC), the National Health and Family Planning Commission (NHFPC), and relevant Beijing municipal authorities, established a joint investigation team and announced its findings regarding Baidu. On May 2, the joint investigation team entered Baidu’s premises to conduct an evidence-based investigation focused primarily on the issues surrounding Baidu Search in the “Wei Zexi incident” and the deficiencies in its paid-ranking mechanism. The investigation team concluded that Baidu’s keyword-based paid-ranking results objectively influenced Wei Zexi’s choice of medical treatment. Furthermore, Baidu’s paid-ranking mechanism exhibited problems such as excessive weighting of paid bids and unclear labeling of commercial promotions, which compromised the fairness and objectivity of search results and were prone to misleading internet users. Immediate rectification was deemed necessary.

The investigation team has put forward rectification requirements:

I. Immediately Conduct a Comprehensive Cleanup and Rectification of Commercial Promotion Services Related to People’s Lives, Health, and Safety, Including Those in the Medical Sector. Effective immediately, a comprehensive cleanup and rectification shall be carried out for commercial promotion activities related to healthcare, pharmaceuticals, health supplements, and other relevant areas. Non-compliant information shall be taken offline immediately upon discovery, and medical institutions that have not obtained the necessary qualifications approved by the competent authorities shall not engage in commercial promotion.

II. Reform the bidding-based ranking mechanism by ensuring that rankings are not determined solely by the amount paid. Immediately adjust the relevant technical systems, and by May 31, 2016, propose and implement a ranking algorithm that prioritizes credibility as the primary weighting factor; clearly label each piece of commercial promotional information with prominent identifiers and provide risk warnings; strictly limit the proportion of commercial promotional content to no more than 30% per page.

III. Establish and improve mechanisms to safeguard internet users’ rights and interests, including an advance compensation system. Ensure smooth channels for public supervision and reporting, and enhance the efficiency of handling and processing user reports. Upon identification of illegal or non-compliant information or activities that infringe upon users’ rights and interests, services shall be terminated immediately. Establish and refine relevant mechanisms to provide advance compensation for losses incurred by internet users due to misleading commercial promotional information.

Search engines serve as a crucial channel for internet users to access information and exert significant influence in guiding public opinion. The Cyberspace Administration of China will soon launch a nationwide special campaign to regulate search services, accelerate the issuance of the Provisions on the Administration of Internet Information Search Services, and promote the rule of law and standardization in the management of search services. In collaboration with relevant departments, it will severely crack down on illegal and non-compliant activities involving the online dissemination of false information and false advertisements concerning medical care, pharmaceuticals, health supplements, and other areas critical to the life, health, and safety of the people. The State Administration for Industry and Commerce will expedite the release of the Interim Measures for the Administration of Internet Advertising to further standardize market order in the realm of internet advertising.

“The Wei Zexi Incident”: Investigation results involving the relevant medical institutions will be announced separately by the competent authorities.

In response to the rectification requirements issued by the Cyberspace Administration of China, Baidu will implement measures across six key areas:

1. Immediately conduct a comprehensive review of commercial promotion services for medical entities. Commercial promotion shall be strictly denied to medical institutions that have not obtained the necessary qualifications approved by the competent authorities. Meanwhile, medical promotional content containing violations (including drugs, medical devices, etc.) shall be promptly taken offline. In accordance with relevant regulations of the Chinese People's Liberation Army (PLA), Baidu will cease all commercial promotions conducted in the name of the PLA and the Chinese People's Armed Police Force, including those involving hospitals affiliated with the PLA and the Armed Police Force, effective immediately;

2. For commercial promotion results, change the previous ranking mechanism that was primarily based on price to a new mechanism that prioritizes reputation, with price as a secondary factor;

3. Control the number of commercial promotion results by strictly limiting the quantity of commercial promotional information on search results pages, especially the homepage; the proportion of commercial promotional items per page shall not exceed 30%;

4. Clearly label all commercial promotional content in search results and provide effective risk warnings;

5. Strengthen the ecosystem of medical content in search results, establish a rating system for medical content, and collaborate with institutions such as the National Health and Family Planning Commission and the Chinese Academy of Medical Sciences to jointly improve the quality of medical information, enabling internet users to access accurate and authoritative medical information and services;

6. Continue to improve the construction of mechanisms for protecting internet users' rights and interests, establish a 1 billion yuan protection fund, and provide advance compensation for losses incurred by internet users due to counterfeiting and fraud encountered when using commercial promotional information, after verification.

According to Baidu, during the investigation period and under the supervision of the joint investigation team, Baidu has re-verified the qualifications of all medical-related entities (including medical institutions, pharmaceutical and medical device companies, and drug manufacturers). It has taken offline 2,518 medical institutions and 126 million promotional entries. Baidu will implement the aforementioned rectification measures by May 31 and accept ongoing oversight from regulatory authorities and the general public.

Xiang Hailong, President of Baidu Search Company, stated that the stationing of the joint investigation team has provided Baidu with substantial guidance on its business operations, helping the company to scrutinize existing issues and improve management. Although these rectification measures will impact Baidu’s short-term interests, we believe that under the guidance of the investigation team, Baidu and the search engine industry will achieve healthier development, better safeguard the rights and interests of internet users, and significantly promote the improvement of medical service quality.

“Baidu has recently established a new search company, and we are confident and determined to take this as a new journey and starting point to engage in a long-term and resolute fight against harmful information, providing users with simpler, more convenient, and more trustworthy search services,” said Xiang Hailong.

For further coverage on Baidu and the Wei Zexi incident, please stay tuned to VCBeat’s follow-up reports.