By John Foley
HONG KONG Aug 18 (Reuters Breakingviews) - Critical reports
by Chinese state TV have knocked 9 percent off the dotcom
giant’s shares. It may be professional envy rather than
political conspiracy. Still, the Communist Party’s relationship
with the web is fractious. And Baidu’s ownership structure may
be an Achilles' heel.
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-- China Central Television, the state broadcaster, has
aired a series of reports criticising online search giant Baidu
for its business practices, including allegations that it helped
users to circumvent rules on online advertising of
-- On Aug. 15, CCTV-2 suggested Baidu’s advertising
practices were inappropriate, after a reporter disguised as a
marketer for a weight-loss product managed to advertise on the
site with help from staff at Baidu’s marketing centre.
-- Another report, aired on Aug. 16, featured a professor at
Beijing’s Tsinghua University, Cai Jiming, who has sued Baidu
for abuse posted on forums which the company hosts.
-- Baidu has built its market share considerably since
Google stopped offering search directly in China, a move the
U.S. group said was a response to China’s requirement that
search operators censor the information they require. Its share
of search is “over 70 percent”, according to state media agency
Xinhua on Aug. 18.
-- Baidu’s shares are listed in the United States, and the
company uses a vehicle known as a “variable interest entity”,
which gives investors contractual rights rather than ownership
of its core licences, to circumvent rules on foreign ownership
of certain media businesses.
-- Baidu shares closed at $138 on Aug. 17, down 9 percent
from the beginning of the week.
-- Reuters story: China's Baidu may face tougher rules after
state media criticism [ID:nL3E7JG1ED]
(The author is a Reuters Breakingviews columnist. The
opinions expressed are his own)
-- For previous columns by the author, Reuters customers can
click on [FOLEY/]
(Editing by Peter Thal Larsen and Sarah Bailey)
Keywords: BREAKINGVIEWS BAIDU/CCTV/
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