Baidu Rebuked for Misleading and ‘Vulgar’ Ads

A local internet regulator has taken search giant Baidu Inc. to task for allowing some of its apps to run what it called misleading and ‘vulgar’ advertisements.

The official rebuke highlights the ad-dependent company’s struggle to adapt now that search no longer serves as the primary gateway to the internet, a function increasingly claimed by social media platforms like WeChat. That change has cost Baidu, which took its first quarterly loss as a public company this year largely due to a drop-off in its core business.

The Shanghai Municipal Cyberspace Administration criticized Baidu in a statement Wednesday for displaying ads featuring overly sensational headlines, vulgar content, including ones featuring images of bikini-clad women, and misleadingly low prices for products, including one promoting a 55-inch television priced at 99 yuan ($14.34). The administration accused the company of putting its own interests ahead of “social norms” in an effort to boost clicks.

The Shanghai regulator ordered Baidu to fix its ad business and clean up the problematic posts in a statement, adding that a Baidu representative said the company would comply.

The ads with which the regulator takes issue are part of Baidu’s new business of so-called in-feed ads — embedded in newsfeeds or social media streams on mobile apps — deployed by app operators including ByteDance Ltd., Tencent Holdings Ltd. and Weibo Corp.

China’s internet has transformed in recent years with the emergence of so-called super apps like Tencent’s WeChat, which typically have their own built-in search tools. Baidu, which was the gateway to the country’s internet during the desktop era, has lost market share over the past decade with the rise of mobile.

Baidu posted its first loss in the first quarter this year since going public in 2005. The company reported a loss of 327 million yuan ($47.3 million), compared with a profit of 6.69 billion yuan the same period a year before. CEO Robin Li attributed the drop to a decline in the company’s advertising business due to a slowing economy and increased scrutiny of online content.

This isn’t the first time that the search giant has gotten into hot water over advertising. In 2016, a college student died after the company’s search engine led him to a bogus and expensive experimental cancer treatment. Baidu has since reviewed its content to remove illegal medical advertisers, the company said.

Contact reporter Tang Ziyi (ziyitang@caixin.com)