Baidu probe

Qihoo 360 stops accepting medical advertisements in wake of Baidu probe

Search engine has 5 per cent market share

PUBLISHED : Wednesday, 04 May, 2016, 6:28pm
UPDATED : Wednesday, 04 May, 2016, 6:39pm

The fallout from the probe of Baidu’s health-care advertising operation has prompted Qihoo 360 to stop all consumer-related medical service marketing on its search engine, the company said on Tuesday.

In a statement, Qihoo 360 pledged to provide “safe, clean and trustworthy search engine services” for its users.

“We have ... realised that as long as online promotion for the medical industry exists, it is not possible to eliminate the harm that users could encounter,” said the company.

Qihoo 360 is primarily an internet security company that produces antivirus software products and a web browser, but it has branched out to producing web applications, smartphones and the search engine business.

The decision to stop medical advertisements allows Qihoo 360 to boost their credibility
Zhang Yi, iMedia

Qihoo 360 holds the second largest market share in mainland China’s search engine market at about 5 per cent, according to data from market research firm iResearch. Market leader Baidu holds more than 80 per cent.

Industry observers say Qihoo 360’s move to stop its consumer-related medical service marketing is a strategic move to gain advertising market share while Baidu faces a regulatory probe over the death of 21-year old cancer patient Wei Zexi, who died after experimental treatments at a Beijing hospital failed to work. Wei had discovered the hospital via a paid listing on Baidu.

“For Qihoo 360, even if they do not offer any more paid medical services listings on their search engine, it will not impact the company very much [in terms of revenue] as their market share is not very much to begin with,” said Zhang Yi, head of iMedia, an internet consultancy based in Guangzhou.

Zhang said most private hospitals in the so-called “Putian network”, which controls an estimated 80 per cent of private hospitals on the mainland, tended to prefer advertising on Baidu since the search engine had a dominant market share and a wider reach. The Putian hospitals are a major advertising client for Baidu, with Nomura Securities estimating last year that the hospitals contributed about 10 per cent to 12 per cent of Baidu’s advertising revenue.

“The decision to stop medical advertisements allows Qihoo 360 to boost their credibility and attract clients who may be hesitant to continue advertising on Baidu amid the medical advertising scandal,” Zhang said.

The authorities were expected to place tighter regulations around search engine marketing, which previously lacked supervision, he said.

Draft legislation drawn up in September last year will classify paid search engine listings under the amended advertising law enacted that same month, said Eugene Low, partner at the Hong Kong office of law firm Hogan Lovells.

“Before the amended advertising law in China, search engine adverts were operating in a grey area,” said Low, who added that this would no longer be the case.

Sogou, the search engine arm of Chinese internet company Sohu, declined to comment on whether it would continue or halt its medical advertisement listings. Sogou is the third-largest search engine on the mainland in terms of market share.

“We will do better to meet consumers’ needs, and provide more authoritative and factual information to help users resolve their problems,” Sogou said in an e-mailed statement.

In its latest earnings call, Sohu said medical and health care was among Sogou’s top five industries in terms of advertising revenue, MorningStar equity analyst Marie Sun said.