Recently, Chinese regulators announced an investigation into Baidu after a 21 year old Chinese student accused the company of promoting false medical information on its search engine. The student had a rare form of cancer and was undergoing controversial treatment advertised on Baidu. The treatment was unsuccessful leading to the death of the student last month and an outcry against Baidu for its inability to check the credibility of medical advertisers on its platform. Baidu earns a significant portion of its ad revenues from private hospitals and according to a report by Tencent Technology this figure was around $1.5 billion in 2014. The company’s stock price fell by 8% when the investigation was announced. While Baidu’s reputation has been impacted by this incident, results of the investigation, and actions arising out of it, will be key to assessing the impact on the company. We believe this incident could impact Baidu’s reputation and possibly its business as well. However, given both the company’s dominant market share in China and lack of alternatives for users, the impact might not be significant. Regulatory changes to medical advertisements online following the investigation can however have a greater impact on Baidu’s revenues.
See our complete analysis of Baidu here

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