Although Baidu.com's reputation has been tarnished by an embarrassing expose, the debacle could benefit the industry in the long run as it forces the country's top search engine to clean up its act, analysts said.
'China's internet development is still in its early stages. The incident could be beneficial to the industry, as Baidu improves the quality of its advertisements and monetising algorithm,' said Dick Wei, a China internet analyst at JP Morgan.
On November 15 and 16, China Central Television (CCTV) called Baidu's practice of accepting paid listings questionable, claiming that unauthorised and unlicensed medical websites captured the top listing positions, ahead of legitimate websites, in Baidu's search results, owing to their willingness to pay higher prices for popular keywords.
Websites such as tongnian.com, a charity portal for youngsters, are largely blocked from Baidu's listings, as they are unable to pay for keywords. Tongnian said the total number of its webpages included in Baidu's index were down from more than 100,000 to only two currently.
Baidu said it had never excluded websites of any customers just because they did not pay for keywords.
The CCTV report caused an immediate uproar among the public, and investors in the Nasdaq firm dumped Baidu shares, which had dropped 25 per cent by last Friday.
