News reading app Toutiao was discovered to be allowing placement of ads linked to a number of private hospitals, suspected of violating the country’s advertising regulations, local media is reporting (in Chinese).
Users recently found that after they tapped into the local news channel a number of medical ads showed up, most of them for private dental and traditional medicine clinics. But neither medical advertising approval has been found on the app for these ads, nor have these private hospitals attained prior approval from local health authorities.
Illegal medical ads have rarely appeared on websites since Baidu’s unethical advertising scandal broke out last April, when the death of a college student who claimed to have used the search engine to seek dubious cancer treatment put into question Baidu’s paid medical ad model.
The search engine giant was hit hard by the advertising scandal, with its Q2 2016 net profit plummeting by 34.1% compared to the same period of the previous year (in Chinese).
An industry and commerce department officer said Toutiao is suspected of violating the Advertising Law and the Interim Measures on Internet Advertising Management, and they will carry out an investigation into the matter if it proves true.
The Flipboard-like news aggregator app finalized its US$ 1 billion series D this month, putting its valuation at US$ 11 billion.
For a potential successor to China’s BAT (Baidu, Alibaba, and Tencent) like Toutiao, it will be a wise choice for the news reading app to give up immediate interests and learn the lessons of Baidu crisis and not repeat it.
TechNode found that Toutiao has pulled all medical ads in question as of press time.