Google may be the world's favourite search engine, but in China, which has the maximum number of internet users in the world, it's Baidu that rules. However, its popularity may suffer a hit after state media said it allowed unlicensed medical services to buy high search rankings to win more customers.

NASDAQ-listed Baidu was accused on a state television show this month of letting the unlicensed services pay for prominent positions on its pay-for-performance (P4P) search platform, netting them more "clicks" for expensive but useless treatments. The claims sparked widespread public criticism of the Chinese search giant and dragged down Baidu's stock.

Baidu's CEO, Robin Li, has promised action, to regain the company's reputation. "We have removed the key words of all four clients mentioned in the report and have begun to double-check the licenses of all other hospitals and pharmacies on our client list," he told the official Xinhua news agency.

He said the company had sacked staff over the scandal and more may follow. "Baidu employees who are found to have been involved in the scandal will be penalised...We have already fired people who helped fabricate documents for unlicensed suppliers," he said.

The television report on China Central Television described several ill people who used Baidu to search for treatments and were steered to unlicensed and expensive hospitals or medicines that failed to cure them. One patient told the programme that he had wasted more than 10,000 yuan ($1465 or £950) at a clinic that he chose because it topped the Baidu results. The unlicensed clinic paid Baidu nearly 17 yuan per click (£1.60) for a prominent ranking, according to the report.

The programme also alleged that some companies that did not pay were omitted from results. But in a statement, the firm insisted, "Baidu has never excluded websites of any customers because they did not pay for keywords, and Baidu does not tolerate such practices."

According to Li, the company will soon launch a new advertising system that will offer more information about the companies to people using the search engine. He said that the new system was called "Phoenix Nest," and that it was meant to offer better search result rankings, but did not elaborate further on how it would operate.

Baidu dominates the Chinese Web search and advertising market, with an estimated two-thirds of the audience in the world's most populous market. Google Inc, the global market leader in Web searches, is a distant second in China.