Baidu, one of China’s most successful technology companies, is facing a crisis.
The Nasdaq-listed company’s shares have dropped 10% in the first two days of this week after Chinese regulators launched an investigation into the search engine’s role in a student’s death. Hundreds of thousands of China’s internet users are threatening a boycott of all Baidu products, from search to music streaming, which could seriously hurt the company’s bottom line.
The reason? Wei Zexi, a 21-year-old college student from northwestern Shaanxi province, who died in mid-April of synovial sarcoma, a rare form of cancer. Wei died after choosing an unorthodox, untested treatment at a Beijing hospital featured in Baidu’s search results. By the time he found out about more reliable treatment (with help from someone outside China, and Google), his family was out of money and he was out of time.
Now Baidu, one of the most powerful gatekeepers of information in China, is being accused of “evil” by putting profits ahead of citizens’ health. Like other search engines, Baidu draws nearly all its revenues from ads, and an estimated 30% of that comes from medical advertising.
Business is good—Baidu reported a 24% jump in revenue in the first quarter of 2016, on the strength of China’s internet growth.
But as Wei’s case shows, opposition to Baidu’s business model, and particularly to it profiting from un-vetted doctors and hospitals, is growing, and not just among users. While China’s internet companies are enjoying a boom, “their sense of social responsibility and corporate values did not advance with the times,” the state tabloid Global Times wrote May 5, in a chilling op-ed that hints at how serious the government investigation could become.
Why blame Baidu?
Baidu is not the only institution to blame for Wei’s embrace of a little-tested and over-hyped treatment, called dendritic cells and cytokine-induced killer cells (DC-CIK) immune therapy. The doctor he consulted touted it on CCTV, China’s state national broadcaster, which Wei took as proof of his credibility. The Beijing hospital he went to was owned by the military and backed by the state. (It had outsourced its cancer treatment department to shady private medical institutes, Chinese media reported after Wei’s death.)
In fact, the Chinese government’s lax oversight of the country’s health industry appears to be the root cause of the tragedy.
“I had no idea Baidu was so evil at the time.” But since Wei died, tens of thousands of Chinese citizens have expressed their public disgust with Baidu, thanks in part to a heartfelt essay Wei wrote online before his death. Wei answered the question “What do you think is the greatest evil of human nature?” on Zhihu, China’s version of Quora.
His answer? Baidu.
“I had no idea Baidu was so evil at the time,” he wrote. So far, the answer has attracted more than 44,000 “agrees” and thousands of comments. “I only hope heaven doesn’t have Baidu,” one blogger wrote, mourning Wei’s death.
To understand the uproar, it’s important to remember one thing: Baidu is even more important to China than Google is to rest of the world, thanks to the Great Firewall that censors all foreign websites that are deemed hostile to the Communist regime. Even before Google left China in 2010, Baidu was dominant—it currently controls more than 80% of China’s search market, according to Chinese research firm Analysys.
Baidu controls the flow of information for China’s 700 million internet users, who have few other ways to research something online. (Microsoft’s Bing, and local search engines Sogou and Qihoo 360 are rarely used because they have less complete information.)
Sure, a Google search may turn up bad medical advice from one website. But China’s internet users are confined to Baidu results on the country’s censored “intranet”—separated from most foreign news outlets, Wikipedia, the bevy of non-profit health organizations outside China, or Facebook and Twitter.
Baidu is even more important to China than Google is to rest of the world. While China’s internet users understand that Baidu sells ads, many believe the company’s claims (link in Chinese) that it performs strict due diligence before accepting ads—and have no other source of information about that company to rely on.
This gives Baidu an even greater responsibility to Chinese internet users than Google has to those in the rest of the world.
And yet, Baidu appears to violate that trust when it comes to Chinese citizens’ health. On several occasions this year, Baidu was found to be selling admin roles in its illness-related chat rooms to third parties that pushed dodgy private hospitals.
What if Wei had access to Google?
What would happen if Wei had access to Google to search for his treatment instead?
A search in English for “synovial sarcoma” on Google outside China’s Great Firewall leads first to a Wikipedia page, followed by a global initiative from a New York computer scientist who died of the cancer, with the latest development in the cancer’s treatment and research results around the world. Searching “DC-CIK immune treatment” leads to several academic papers saying the treatment is not ready for clinics.
Other variations on searches for his disease and the controversial treatment turn up studies from the UK’s National Institute of Health, and other medical centers. There are, to be sure, some ads—but they’re often at the bottom of the page, and couched in terms like “offers options… in some cancers.”
Wei’s first result on Baidu was an advertisement, or so-called “Paid Search,” of the Beijing hospital that failed him. The doctor he met said the treatment was 80 to 90% effective, and he was “guaranteed” to live for 20 more years after the treatment. (Baidu has since taken down ads for this type of cancer treatment.)
“Now I’m in hospital… but my family is running out of money.” After an overseas student in the US helped him look up the cancer treatment on Google, and then contact US hospitals, he realized that the DC-CIK therapy he received was only in clinical tests in the US, and had a low record of effectiveness.
But it was already too late. “Now I’m in hospital, and find a truly reliable technology, but my family is running out of money,” he wrote on Feb. 26.
Google has ad policies which restrict, or rule out entirely, advertisements of medical treatments, prescription drugs, and procedures, depending on country. But its medical ad policies have come under fire before as well. In 2011, Google paid a half-billion dollar penalty in a settlement to avoid prosecution for aiding illicit pharmacy groups to run ads.
Plenty of suspicious-looking medical ads remain on Baidu even after the scandal. One of Baidu’s biggest ad clients is the Putian group of hospitals, owned by businessmen from the southeastern Fujian province, which are notorious for selling dodgy treatments for venereal diseases and reproductive problems.
Wei’s hospital had outsourced its cancer treatment services to a Putian hospital. It is now under investigation, and has stopped taking patients (link in Chinese).
Baidu tries to shift the blame
Since Wei’s tragic tale has been circulated online, Baidu says it has expressed its condolences to his family. After Chinese regulators announced an investigation on Monday (May 2), Baidu stated it would fully cooperate and leave “no opportunity for false online information and illegal activities.”
Internally, though, the company seems to think it doesn’t deserve the criticism it is getting. A “search engine is just like a mirror reflecting the whole true world,” an article posted Tuesday on Baidu’s intranet says, the Beijing News (link in Chinese) reported. The article explains the scandal to Baidu employees and instructs them to “work diligently.” Baidu rejected 30 million false medical advertisements in 2015, it says.
“Today as an excellent enterprise, we need to carry out the supervisory responsibility that should have been fulfilled by the country and the industry,” the article read. “This is the anticipation from the society. Because with great power comes great responsibility.”
Baidu, though, has had that great responsibility all along. Unfortunately, the company is only now recognizing it.