Baidu dominates Chinese internet

One of the founding members of Chinese internet services behemoth Baidu has been arrested on suspicion of promoting online gambling sites. Shi Youcai was taken into custody by law enforcement officials in Hangzhou, according to Chinese media outlets. The company has yet to make a public statement on the matter.

Shi joined Baidu in 2001, the year after it was founded. He stayed on for a decade before eventually returning in 2019 to lead the sales team of the company’s Mobile Ecology Group, the business unit that is intended to replace Baidu’s vaunted search engine.

Baidu holds over 71% of China’s search engine market share

Little known in the West, Baidu is one of the largest websites in the world. It currently ranks fourth globally on the Alexa site’s visitor traffic rankings, behind only Google, YouTube, and Chinese retail shopping site Tmall. According to statcounter, Baidu holds over 71% of China’s search engine market share; Google sits at just over 3%.

Check those links

Baidu has a bit of a history when it comes to violating Chinese gambling advertising rules. One of the more serious incidents happened in 2016 when the Beijing News reported that Baidu’s search engine was running ads that appeared to be for regular companies, but sent those who clicked on them to online gambling sites.

Beijing News’ investigation found that the links usually only redirected people to the gambling sites between 11pm and 9am. The rest of the time, the links either sent people to the real company site or did not appear at all.

lax in its quality control

It did not appear that Baidu was actively trying to trick search engine users, but rather that it was lax in its quality control. The gambling operators targeted companies that had not registered their URLs with Baidu. They opened their Baidu accounts through third-party services that did not bother with proper credentials verification, so it was easy for the gambling sites to pretend they were different companies.

China getting tough on gambling

China has renewed its efforts to crackdown on illegal gambling this year, focusing the most on “cross-border” gambling. In June, the Chinese Ministry of Public Security launched a public online reporting platform that allows citizens to report each other for cross-border gambling activity. This not only includes people who gamble themselves, but also those who aid gambling, such as arranging for others to travel to other countries to gamble.

Of particular concern for the Chinese government are Philippine Offshore Gaming Operators (POGOs). The POGOs can pose a problem in a couple of ways. First, they frequently target Chinese citizens to grow their customer bases. Second, POGOs are known to hire mainly Chinese nationals illegally. They then either don’t report them as employees, skirting their tax burden, or fail to pay the 25% withholding tax on each worker.

Philippine President Rodrigo Duterte agreed to work with China on stopping the import of illegal gaming workers, deporting any who are discovered.