Regulators Summon Baidu Over Chinese Search-Engine Crash

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(Beijing) — Chinese technology firm Baidu Inc. was summoned by regulators Wednesday for talks after its online search engine crashed for 42 minutes, ahead of two key political meetings, the first of which kicks off on Friday.

The breakdown in service, which occurred on Tuesday evening, was due to bugs that caused the search engine’s servers to stop working during a software upgrade, according to a Ministry of Information and Information Technology (MIIT) statement published on Thursday. The problem has since been fixed.

The crash resulted in hundreds of millions of failed search requests on Tuesday, MIIT said.

The widespread attention the crash garnered was a reflection of the huge user base that depends on Baidu’s service, according to a report by market research and consulting firm FellowPlus. Baidu accounted for 74% of search-engine market share in China by traffic as of February, according to industry watcher StatCounter.

The MIIT also ordered other leading Chinese technology firms, such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd., to ensure stable operations and cybersecurity, especially during the meetings of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), which starts on Friday, and the National People’s Congress (NPC), which starts on Sunday.

The crash was not only a technological matter, but also involved big data and national information security, explaining MIIT’s concern, according to FellowPlus.

Baidu, which increased its market share thanks to the strength of its search engine, especially after Google was blocked in 2014, has been mired in a branding crisis since a college student died last April after receiving experimental treatment for sarcoma at a hospital that Baidu suggested based on paid search results.

Its market share by traffic has tumbled from nearly 80% at the beginning of last year to 75% in May, when the tragedy came to light, and the company has reported a year-on-year revenue drop for two quarters. In the last quarter of 2016, revenue fell by 9% to $2.65 million, steeper than a 6% drop a quarter earlier.

The Baidu outage could be positive for other search operators, such as Sogou and Qihoo 360 Technology Co. Ltd.’s Haosou, since the government may want more diversity in the mobile search market, said Ryan Roberts, an analyst at financial services provider MCM Partners.

The share price of Nasdaq-listed Baidu fell by 0.48% to $174.48 on Thursday.

By Coco Feng

Caixin

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