A smartphone with an Android operating system and the Baidu Browser application is seen in this picture illustration taken February 22, 2016. [Photo/Agencies]

BEIJING -- The Cyberspace Administration of China (CAC) on Monday demanded an overhaul of China's leading search-engine Baidu following an investigation.

The CAC said Baidu relied excessively on profits from paid listings in search results, and did not clearly label such listings as the result of commercial promotion, compromising the objectivity and impartiality of search results.

Like other search engines, Baidu sells links that appear in search results. The more an advertiser pays, the higher the link will appear in the search results. The public are likely to be misled by search results on Baidu, the CAC said.

NASDAQ-listed Baidu was already in the eye of a public-relations storm after the death of Wei Zexi, 21, a computer science major at Xidian University in northwest China's Shaanxi Province.

Wei was diagnosed with synovial sarcoma, a rare form of cancer, in 2014 and had been undergoing a controversial cancer treatment advertised on Baidu, at the Second Hospital of Armed Police Beijing Corps, which the Wei family also found through a Baidu search. The treatment was unsuccessful and Wei died on April 12.

In February, on question-and-answer website Zhihu, a Chinese version of Quora, Wei directly accused Baidu of being at least partly to blame for his troubles. The anger of netizens who claim the search engine does not properly check the credentials of advertisers has been growing ever since.

A team of investigators from the CAC, the State Administration of Industry and Commerce, and the National Health and Family Planning Commission (NHFPC) was dispatched to Baidu on May 2. They found Baidu's search results did influence Wei's choice of medical treatment and specified areas in which Baidu needs to change.

The search-engine must change the current model of paid listings and stop ranking search results solely according to price-tags. It needs a new listing mechanism which places the heaviest weight on a widely accepted objective assessment of products and organizations, the investigators said.

They asked Baidu to clearly indicate advertisements and display a risk reminder. The share of commercials in search results should be restricted to less than 30 percent of each page.

Baidu was also ordered to make changes in commercial services regarding the medical industry. Such information must not break regulations and institutions unaccredited by industry regulators should not be promoted.

The investigators also required Baidu to respond to user complaints about inappropriate content and to compensate them for any losses stemming from misleading information.

The CAC said it will pay much closer attention to the country's Internet search services and deal severely with false medical advertising.

A statement from Baidu said that it staunchly supported the requirements of the investigators and will carry them out. At the request of the military, it will also stop any commercial promotion in the name of the People's Liberation Army and the armed police forces, including affiliated hospitals.

Baidu will shift its listing mechanism from the one mainly based on price bidding to the one that relies chiefly on the standing of the organization, with price bidding as a secondary consideration.

Baidu also proposes to work with the NHFPC and the Chinese Academy of Medical Sciences to improve the quality of medical information featured on its search engine. It will set aside one billion yuan ($150 million) to compensate verified losses from fraud, said the statement.

During the investigation, Baidu has reviewed the credentials of all medical institutions featured on its search engine, and pulled back 126 million pieces of information involving 2,518 institutions, it said.