Chinese search giant's model 'misleading': regulator

Internet giant Baidu, China's equivalent of Google, must change how it displays search results, regulators said today, following an outcry over the death of a student whose family used it to seek a cancer cure.
The ruling by the Cyberspace Administration of China (CAC) calls into question the business model of Baidu, which is quoted on the Nasdaq exchange in New York and has a market capitalisation of more than USD 60 billion, even after it fell heavily in the wake of the scandal.
Wei Zexi, 21, had already been diagnosed with a terminal soft tissue disease when his relatives used the search engine to find an experimental immunotherapy treatment at a Beijing hospital run by the armed police force.

Before he died, Wei denounced the firm online as "evil" and warned other cancer patients "not to be cheated" in comments that went viral, drawing an onslaught of criticism against Baidu.
"Baidu's mechanism for ranking paid results depends too heavily on price paid and does not clearly indicate paid results, as well as other problems," the CAC said in an article in its in-house newspaper.
The system "influenced the impartiality and objectivity of its search results, making it easy to mislead users, and must be immediately rectified".

In a response posted online, the Internet firm pledged to display "eye-catching" markers and warnings on advertised content and limit the proportion of paid search results to 30 percent per page.

Baidu also pledged to set up a fund of 1 billion yuan (USD 154 million) to compensate future victims of paid content.
During the investigation period it had removed 126 million paid results, from 2,518 medical institutions, from its searches, it said.