China's main search engine Baidu sees first ever revenue drop

Baidu building Image copyright AFP

China's leading search engine Baidu has posted its first-ever decline in quarterly revenue in the wake of regulatory pressure over ads.

Revenue fell to 18.3bn yuan ($2.7bn, £2.2bn) for the third quarter, 0.7% down from a year earlier.

The drop comes as a government curb on its advertising continues to affect profit.

The crackdown by regulators was in response to paid-for ads listing suspect, ineffectual medical treatment.

It comes after an outcry over the death of a student who tried an experimental cancer therapy that came top of the list in his Baidu web search.

The cancer death scandal

Student Wei Zexi, who was diagnosed with synovial sarcoma in 2014, had said he found out about a controversial cancer treatment through Baidu.

The treatment was unsuccessful and the 21-year-old student died on 12 April.

Before his death, Wei publicly accused the hospital of misleading him and his family of the treatment's effectiveness, and criticised Baidu for selling search listings for medical information to the highest bidder.

Baidu has denied ranking hospitals in promoted search results solely based on how much they paid, and says the hospital had been approved by the Beijing municipal government.

'China's Google'

Baidu is China's largest search engine with 80% market share and is often compared to Google.

The company also said it expects revenue for the fourth quarter to again show a slight decrease from the previous year.

Earlier this month, Baidu had announced a $3 billion investment fund focused on mid- and late-stage start-ups to explore new growth opportunities.

Baidu is also investing in artificial intelligence and self-driving car technology.

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