Baidu ordered to overhaul its healthcare ads

Hospital also faulted after student's death

The parents of Wei Zexi, a computer science major at Xidian University in Shaanxi province who died of a rare form of cancer, wait outside a funeral home in Xianyang, Shaanxi, on April 13. WAN JIA / FOR CHINA DAILY

Chinese regulators demanded on Monday an overhaul of the healthcare advertisements displayed by the country's leading search engine Baidu.

The demand came after the death of a young man who received experimental cancer treatment at a Beijing hospital. He found the treatment online.

Baidu's Nasdaq-listed shares fell by more than 3 percent in morning trade on Monday following the ruling, Reuters reported.

Investigators have also found that the hospital illegally outsourced its departments to a for-profit private company and published fake medical advertisements to lure patients.

Wei Zexi, 21, a student from Shaanxi province, died from synovial sarcoma, a rare soft tissue cancer on April 12. Since September, he had spent more than 200,000 yuan ($31,000) on a type of immunotherapy at the Second Hospital of the Beijing Armed Police Corps, which he was recommended while searching for the disease on Baidu.

Before he died, Wei denounced the company online as "evil" and warned other cancer patients "not to be cheated" in comments that went viral, drawing waves of criticism against the search engine.

Baidu, the Chinese equivalent of Google, is listed on the Nasdaq exchange in New York and has a market capitalization of more than $60 billion, even after its shares fell heavily in the wake of the scandal.

Monday's ruling by the Cyberspace Administration of China said the company relied excessively on profits from its paid listings in search results and did not clearly label such listings as the results of commercial promotion.

The system "influenced the impartiality and objectivity of its search results, making it easy to mislead users, and must be immediately rectified", the statement said.

The company has been ordered to adopt a new listing system that does not fully depend on the advertising price but also considers the advertisers' "reputation". Its commercial content should be no more than 30 percent on each Web page, the ruling said.

Xiang Hailong, head of Baidu's search business, said that Wei's death has made the company rethink its responsibility.