China Internet giant Baidu's stock price dives amid allegations
November 20, 2008
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Country:
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Central African Republic
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Shares in China's Nasdaq-listed Internet giant Baidu have dived more than a third amid allegations it gave unlicensed medical firms prominent exposure for money, without telling its customers.
The price of Baidu, referred to as China's Google, has lost 37.5 percent after reports on state TV that it let companies, including unlicensed medical firms and hospitals, pay to appear near the top of keyword search results.
Shares in Baidu were at 111.77 dollars following trade on Wednesday in the US, down from 178.89 dollars at close on Friday, before the reports over the weekend.
Baidu did not state which companies had paid for the more prominent listing, making it impossible for its users to judge the search results on their own merit.
It said in a statement it had never excluded companies that did not pay, and that it had cancelled paid search listings of certain customers such as medical and pharmaceutical companies without licences.
These customers account for approximately 10-15 percent of Baidu's revenues, it said.
"While Baidu is currently uncertain about the near term financial impact of this measure, Baidu does not believe it would have significant impact on Baidu's results in the long term," the statement said.
In an analyst teleconference Wednesday night, Baidu said it was developing a new advertising system to improve search results, according to Chinese media reports.