Baidu in Trouble?

I find the world of internet search very, very interesting, and increasingly so in places like China. While China may seem like a place with little tolerance for online conflict, I have seen evidence of rip-roaring online fisticuffs all over the Chinese BBS for the past two years. Another great thing about these impassioned posts on the BBS is that they often include pictures, showing protesters rallying against their antagonists peacefully but with emotion and intensity. Yet another interesting observation is that really interesting insights and data from the BBS often don't make it to Western media until days or weeks later. Talk about information arbitrage.

The latest area of conflict I have discovered relates to the Chinese language search engine, Baidu, and accusations of that unholy-of-online-holies, click fraud. Further, from what I've read it appears that Baidu is in the midst of a series of Office Space-type bungles that have garnered it some pretty unflattering chatter across the BBS. It seems like they are having a bad-hair month.

Concerning the accusations of click fraud, one poster laid out a pretty damning fact pattern indicating that Baidu might have internally boosted click results for a paid-search client costing that client millions of yuan (hundreds of thousands of US$):

The client, an obscure cancer research clinic (sounds like a shady character itself), says in a statement that they inked a contract with Baidu in early 2003. (From Baidu's vaguely-worded intro to this service on its Web site the idea of the service is that business clients bid for their rankings in searches on certain key words by netizens. Those that pay more ranks higher up in search results and have more chances of getting clicks, hence business, from potential customers. They also pay Baidu for each visit resulting from such a search.)  The clinic says it has spent millions on this service since then, and clicks on their Web site have indeed grown dozens-fold. But actually business never picked up as a result of more Web traffic. The clinic hired outside help and found out that up to 70% of the traffic actually came from cpro.baidu.com. Rings a bell? They concluded that Baidu artificially bloats traffic to their sites in order to collect more fees.

The original basis for this post was taken from a reporter's own BBS site, with the translated text as follows:

Baidu advertisers protest against click fraud

At noontime on August 4, around ten Baidu advertisers gathered together in front of the Baidu building, protesting against supposed click fraud. the protesters held in their hands an official letter of notice from the city of Beijing. Among those protesters included the Beijing Zhongbei Cancer Medical Research Center.

The research center, which has been an advertiser at Baidu since January 4, 2003, alleges taht the click fraud has been as high as 70%, spending over a couple million yuan over the past years. The center complains that since last year, the click rate has increased exponentially without producing actual sales. Through a neutral party's investigation, it was found that more than 70% of the click traffic originated from cpro.baidu.com, which is a subsidiary of Baidu.

The advertisers demand a full refund.

Ouch. If the outside help hired by the research center is right, this is pretty scary stuff. Admittedly I am neither an expert in click fraud nor an authority on Baidu, but I have always thought that click fraud was perpetrated by entities outside of the search engines with consequences for the search engine's paying clients. This is what I thought the click fraud suits involving Google were about - Google's lack of sufficient efforts to combat click fraud, not that Google itself was the instigator of the fraud. Google has also taken steps to address this issue by providing data on click fraud it catches, and reporting these figures to advertisers (whether or not Google's steps to combat click fraud are sufficient is a matter far beyond my ken and better left to those smarter than me). This situation with Baidu appears completely different, however, where the claim is that Baidu itself generated up to 70% of the click volume for which the client was charged.

Yet another interesting topic is the potential manipulation of search results. Remember that Office Space reference above? Well, Baidu fired 45 employees in two hours in a fairly uncermonious fashion. One such employee actually recorded their interaction with Human Resources and the translated transcript can be found here. This isn't so bad - every large company has their Vault-posted nightmare HR stories. What I found particularly interesting is that a friend of mine in China ran a search on this issue in both Baidu and Google with vastly different results - Baidu came back with only about 6,700 returns, while Google's count was closer to 45,000 (that's not a typo - we're talking 7x the number of Baidu). I am also told that Baidu generally does better on these types of searches than Google. So what's going on here? Good question, but the implications are certainly not good.

We'll see if these stories pick up steam across the BBS and enter the mainstream Western press. If they do, I am afraid Baidu might be in for some tough sledding.

Comments

[Ajoy]

Baidu's click-thru rate are about the same
as Google's in the US. That is the best
argument against the click fraud conspiracy.