Baidu has fired 8 execs, including senior sales/marketing execs, following the recent launch of a bribery probe. An internal memo picked up by a news agency indicates the execs were generally accused of “criminal behavior” and breaking with “company morality,” but doesn’t give details. The memo also states legal authorities have begun investigations, and that 5 of the execs have been detained. Reuters notes Baidu has 180+ employees at the director level, and (like other major Chinese tech companies) entire departments focused on uncovering misbehavior.
What is at stake here? Certainly the reputation of Baidu and the entire Internet industry is at stake. Alibaba encountered corruption problems some time ago. This casts the spotlight on the many corrupt practices that frequently occur in China’s young business culture, such as preferential treatment for customers who pay “special” fees and bribe individual employees. Such practices were almost certainly a factor behind the high-profile spat that saw one of China’s largest associations of hospital owners boycott Baidu’s advertising services in March, dealing a significant blow to Baidu.
This particular probe comes just a half year after another internal probe that saw Baidu hand over cases involving 5 employees suspected of corruption to law enforcement authorities. In that instance 2 of the employees were accused of taking money from websites that wanted to boost their search rankings by falsifying their traffic volume, while 2 others were accused of taking bribes, and the fifth was accused of embezzlement. Leading telecoms equipment maker Huawei also launched a similar internal crackdown last year.
This kind of internal corruption is present at all Chinese Internet companies, large and small. It’s quite common in China for employees to use their position to earn some extra money for themselves, a fact that also lies at the heart of Beijing’s ongoing national anti-corruption campaign at government agencies and big state-run firms. Baidu is leaking details about its campaign to show it’s serious about the issue, but I hope and expect that all the major Internet companies are taking similar measures.