by Andrew Redfern @ 19th November 2008 2:30 pm

Baidu.com. (Nasdaq: BIDU), the leading Chinese language Internet search provider, today issued this press release in response to recent CCTV reports.

The Chinese search engine has been providing customers with targeted marketing solutions via Baidu’s pay-for-performance (”P4P”) paid search platform which enables its customers to reach users who search for information related to their products or services.

Customers may use Baidu’s automated online tools to create text-based descriptions of their web pages and bid on keywords that trigger the display of their links and web page information.

China Central Television (”CCTV”), the largest state-owned television network in China, reported in its program “News in 30 Minutes” on November 15 and 16 that Baidu had been including websites of medical companies that do not hold proper licenses in its paid search listings for some popular medical terms, while excluding certain websites which did not buy keywords.

Shortly after the CCTV program was broadcast, Baidu initiated dialogue with CCTV regarding this matter. At the same time, Baidu removed paid search listings of certain customers, particularly medical and pharmaceutical customers without licenses on file with Baidu.

Baidu will allow these customers to resume access to Baidu’s P4P paid search platform once their relevant licenses are provided to and reviewed by Baidu. These customers account for approximately 10-15% of Baidu’s total revenues. Baidu believes this immediate measure is the most prudent way to protect the interests of Baidu’s users.

Currently, it is difficult to estimate how many removed customers will provide relevant licenses to Baidu and when they will do so. Baidu will work closely with customers to ensure those customers with proper licenses will be able to access Baidu’s services again quickly. While Baidu is currently uncertain about the near term financial impact of this prudent measure, Baidu does not believe it would have significant impact on Baidu’s results in the long term.

On November 17, 2008, Baidu issued a public statement in China, acknowledging that there could be cases where certain companies take advantage of Baidu’s paid search platform for questionable purposes. Baidu is committed to social responsibility and will continue to improve its sales and operational systems commensurate with its status as the leading Chinese language Internet search provider.

Separately, Baidu would like to affirm that Baidu has never excluded websites of any customers because they did not pay for keywords, and Baidu does not tolerate such practices.

Baidu is committed to playing a leading role in shaping the standards for China’s Internet industry. Baidu strives to further strengthen its operational systems and infrastructure. With a more mature operation, Baidu will grow even better able to serve increasing numbers of small and medium- sized enterprises (”SMEs”), the backbone of the Chinese economy.

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