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Why Did Baidu Renew Its Crackdown?

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Jun. 28 2019, Updated 12:26 p.m. ET

Over one billion ads removed

Baidu (BIDU) has taken down billions of advertisements and posts from its platforms. Chinese regulators are pushing Internet companies to clean up their platforms. Chinese regulators want companies to get rid of inappropriate content. Baidu removed 237 million advertisements from its digital platforms in May. The company has removed 1.1 billion ads since the beginning of 2019, according to Chinese media reports.

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A few years ago, Baidu launched a massive crackdown on healthcare ads. A person died after following a misleading cancer treatment ad on Baidu’s platform. The crackdown helped Baidu improve the quality of its ads and stay out of trouble with regulators. However, the crackdown dented the company’s advertising business. Many advertisers left Baidu’s platforms, which caused the company to lose revenues.

Baidu is taking down articles 

Baidu’s latest crackdown has covered regular posts. The company has taken down 3.4 billion articles. The articles contained information related to controlled subjects like gambling. Massive content removal could cut the traffic flow to Baidu’s platforms and have a negative impact on the company’s advertising business.

Advertising is very important for Baidu. However, the company’s growth has been slower. Advertising revenues only grew 3.0% YoY (year-over-year) to $2.6 billion in the first quarter—down from 23% YoY growth in the first quarter of 2018. Google parent Alphabet (GOOGL) and Yandex (YNDX) recorded advertising revenue growth of 15.4% and 18% YoY, respectively, in the first quarter. Facebook’s (FB) advertising revenues rose 26% YoY in the first quarter. Twitter’s advertising revenues rose 18% YoY during the same period.

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