Baidu Facing Chinese Regulatory Heat Over Business Practices

Chinese search engine Baidu

is facing stronger regulation over its business practices after the country's state media challenged the company's reputability. China Central Television (CCTV) created an exposé that showed how easy it is to conduct fraud through Baidu's website. Shares of the company tumbled over this week, falling to below $137 a share from above $150 on Friday. The controversy comes as Baidu has solidified its position in the Chinese search market. Google

pulled out of country last year when it was forced to succumb to strict rules and privacy requirements. Baidu has now established itself as a player in the Chinese internet world. With tightly restricted Internet access in China, the company's success was built on cooperating with authorities to accommodate their demands. With the upheaval over the report, though, it appears that the Chinese government will be forced to increase regulation to illustrate its stance on crime over the Internet. According to a Reuters report, "The half-hour CCTV report showed an under-cover reporter getting advice from an apparent employee of Baidu over how to get around regulations covering pharmaceutical advertising." Baidu declined to comment on the report.