Baidu crisis offers lessons of need to regulate capital

By Wang Wenwen Source:Global Times Published: 2016-5-5 0:08:01

Chinese search engine giant Baidu is racked by a public trust crisis after being accused of contributing to the death of a young man. Laying the blame on Baidu is easy, but we cannot let such tragedies fester without taking steps to bolster supervision of mega companies. The tragedy involves Wei Zexi, a 21-year-old college student who recently died of cancer after he allegedly received questionable treatment from a hospital which is listed high on Baidu's search results.

Baidu should be held accountable for this tragedy, but it is certainly not the only stakeholder in a case like this. Several other Chinese search engines are also involved in making profits from bidding rank, a kind of paid-for advertising, without checking the authenticity of the content.

Some scholars believe that less regulation is good for the efficient functioning of enterprises. But social damage and other negative externalities that result from a lack of supervision can be devastating.

After the latest scandal, many netizens have urged allowing competitors, such as Google, to operate so as to regulate Baidu's behavior. Google was fined $500 million by the US government over advertising it allowed from fraudulent pharmacies. Google now needs to use a verification program created by the National Association of Boards of Pharmacy (NABP) which is used to weed-out rogue online drug sellers and connects to the data supplied by the US Food and Drug Administration.

Issues such as paid listings have been brewing for years, and a tragedy involving all these issues has inevitably erupted. This reflects the loopholes in China's Internet governance.

Although China's Internet enterprises are enjoying a boom thanks to the popularity of technology, their sense of social responsibility and corporate values did not advance with the times.

Without necessary supervision and controls, even if Google is allowed to operate in China, it may become another Baidu that can trade moral standards for maximizing profit.

Wei's death teaches us of the necessity to regulate big companies and powerful capital. The three decades of China's reform and opening-up is a process of learning how to control and effectively use the market. The current anti-corruption drive is facilitating this process to prevent officials from being enticed by profits. It is of equal importance to urge enterprises not to ruin the market order and taint business codes. Without strict legal supervision, the achievement of economic development will be jeopardized by the entrenched interests of capital.

Posted in: Observer

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