BShares in Nasdaq-listed Baidu fell 7.9 per cent on Monday after the Cyberspace Administration of China announced it would lead a task force investigating this incident as well as broader operating issues at the company.   Chinese authorities are investigating Baidu after the death of a computer-science student who allegedly received dubious medical treatment advertised in online search results, which sparked outrage among netizens.   The student died on April 12 from a rare form of cancer called synovial sarcoma. After chemotherapy and radiation failed to cure him he used Baidu to search for alternative treatments.

Medical advertising on Baidu are estimated to account for approximately 30% of its revenues. If the accusations over potentially misleading advertisements are proven to be correct, it may have a significant negative impact on Baidu’s earnings and stock price.

Source:  Press Reports