China's leading search engine is firing four employees -- and three of them have been arrested by local police -- for allegedly taking bribes to delete message board posts.
The scandal broke over the weekend on reports that some users of Baidu Postbar were paying to have forum posts deleted. This isn't the first time that this has happened, but it's the first time that police and actual arrests are involved.
The easy response would be to simply nix the forum. Everyone knows that monetizing a discussion board is a tedious uphill battle. Regulars don't click on ads -- something that Facebook
However, Baidu's growing number of online destinations serve a broader purpose than simply turning a profit. Baidu wants to make sure that it's always close whenever someone is seeking out something online, and providing engaging websites outside of its namesake search hub is a great way to make that happen.
The market doesn't seem to care about the development. Baidu's stock opened higher and was trading nearly 5% higher halfway through the trading day. It only helps that Chinese portal Sohu.com
A key plus for Baidu -- unlike Sohu.com and Baidu mobile search partner SINA
Baidu's latest quarterly report saw revenue and earnings soaring 60% and 70%, respectively. Sure, there was a beneficial effective tax rate propping up Baidu's profitability, but it's still the undisputed dot-com darling in China. Letting its Postbar users and employees know that it won't tolerate illegal behavior -- even to the point of proactively alerting the authorities -- will help keep Baidu at the top.
Bullish on Baidu
A bullish call on Baidu has served me well on Motley Fool CAPS over the years. True to the CAPScall initiative, I'm not going to give up on it now. Baidu has soared 1,184% since I recommended it to Rule Breakers newsletter subscribers six years ago, but it's not the only way to gain some overseas sizzle.
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
The Motley Fool owns shares of Baidu.com and Facebook. Motley Fool newsletter services have recommended buying shares of Baidu.com, Facebook, Sohu.com, and SINA. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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