China has launched an investigation into search giant Baidu after the death of a student who tried an experimental cancer therapy he found online.
Wei Zexi, who died last month from a rare form of cancer, had sought the treatment from a hospital that came top of the list on his Baidu web search.
Baidu has come under fire for allegedly selling listings to bidders without adequately checking their claims.
In a statement Baidu said it was investigating the matter.
The company told the BBC: “We deeply regret the death of Wei Zexi and our condolences go out to his family.
“Baidu strives to provide a safe and trustworthy search experience for our users, and has launched an immediate investigation of the matter.”
Baidu owns search engine and social media services, and is often compared to Google.
On Baidu, listings that have paid for a prominent placement are marked at the bottom with a small sign saying “promote”, but many say this does not identify them as paid-for listings sufficiently clearly.
Baidu’s value fell by more than $5bn on Tuesday, after its shares slumped in the US on news of an investigation by China’s internet regulator. Baidu’s Nasdaq-listed shares fell 7.92%.
Baidu is China’s largest search engine with 70% market share and more than 660 million people using its mobile search every month.
Stephen McDonell, BBC News, China Correspondent
China’s massive search engine Baidu is facing a colossal credibility problem.
It’s one thing for the company to sell top search slots to the highest bidders, but another to manage the fallout when a boy dies of cancer after trusting that a highly placed search result was what appeared to be the most trusted hospital treatment available to him.
All over the world, private companies are administering what on one level are public services, and it is becoming distorted by commercial deals – and this country is no exception.
Baidu says it is looking into this matter but, for the Chinese authorities, that is not enough.
The Chinese government says it will carry out an official inquiry into the role Baidu’s “search results for sale” business model had on the death of Wei Zexi.
What’s more it says the findings of the investigation will be made public.
Chinese people were already annoyed that Baidu sold off search positions, but when it became a life and death matter it has enraged them.
According to state news agency Xinhua, Wei was diagnosed with synovial sarcoma in 2014.
He and his family said he found out about a controversial treatment at the Second Hospital of the Beijing Armed Police Corps through Baidu. The hospital was listed at the top of his search results.
But the treatment was unsuccessful and the 21-year-old student died on 12 April.
Before his death, Wei publicly accused the hospital of misleading him and his family of the treatment’s effectiveness, and criticised Baidu for selling search listings for medical information to the highest bidder.
Baidu has denied ranking hospitals in promoted search results solely based on how much they paid, and says the hospital had been approved by the Beijing municipal government.
Investigations have now been launched against the hospital.
The hospital has yet to comment and efforts to contact hospital officials have been unsuccessful.
In addition to the Cyberspace Administration of China, several other government agencies including the State Administration of Industry and Commerce, and the National Health and Family Planning Commission are looking into the matter.
The outcry over the case follows a similar scandal in January involving ethical practices regarding healthcare advertising.
The story has also reignited public concern over Baidu’s advertising ethics, following an earlier scandal where it admitted it allowed healthcare companies to moderate online health forums.
On popular microblogging network Sina Weibo, the hashtag #Wei Zexi Baidu Advertising Incident# has been trending for days as netizens have called for a boycott of Baidu.