Baidu takes $20 million revenue hit

According to Baidu, the engine will expect to see fourth-quarter revenue to be in the range of US$131 million to US$133 million instead of its initial projection of US$151 million to US$155 million. A month ago a CCTV report revealed that it included fraudulent medical companies among its top search positions.

The company attributed the decline to the November incident - after which it launched an advertising platform that separates its list of paid links from its general search listings - as well as the global economic downturn.

Baidu further said it has conducted an investigation of other companies paying for a spot in its search listings.

The quarterly decline has prompted Baidu to re-evaluate its operations, which includes testing systems to boost revenue and user experience, the company noted in a release.

However, Baidu will not revise its overall paid-listing system.

"As online marketing customers adjust to the current difficult economic environment, we believe they will increasingly realise the value of paid internet search as a very powerful performance-based model," Robin Li (pictured), Baidu's chairman and CEO, said in the release.