Regulatory crackdown on platform chaos, the low-price "carnival" of food delivery is coming to an end

Recently, the year-long battle over food delivery subsidies has finally received a signal to cease.

• Last week, the State Administration for Market Regulation revealed that regulatory authorities have entered relevant platforms to conduct on-site investigations.
• This Monday, the Beijing Municipal Administration for Market Regulation interviewed 12 platform companies, including the three major food delivery platforms.
• Following that, the official website of the State Administration for Market Regulation published a media article clearly stating, “The food delivery battle should end.”

This series of actions indicates that the revelry under the guise of “low prices” is coming to an end. Why do platforms’ financial subsidies harm the interests of merchants, and what is the truth behind it? How have various tactics of platform “involution” affected the survival of small and medium-sized businesses, and how should they be corrected to return to fair competitive practices? This week’s focus in Newsweek examines: the food delivery battle, its outcome, and the truth.

A handmade dumpling priced at 18 yuan on a food delivery platform means that the actual dumpling seller can only receive 1.25 yuan. In Beijing, this amount can’t even buy a single dumpling skin. This is a typical example of “involution-style” competition reported by the Beijing Municipal Administration for Market Regulation this Monday.

Wang Bo, Director of the Network Transaction Supervision Division at the Beijing Municipal Administration for Market Regulation: The platform mainly infringes on the merchants’ right to operate independently, setting some unreasonable rules. For example, some platforms arbitrarily alter the prices of merchants on the platform, and privately launch promotions, severely infringing on merchants’ autonomy in operating.

In addition to the 1.25 yuan dumplings, there are 2.58 yuan lamb skewers with meat pies and 3.31 yuan tomato and egg noodles… The report from the Beijing Municipal Administration for Market Regulation revealed that a certain food delivery platform, without consultation, listed products for a promotional event called “Bargain Group,” setting extremely low prices to attract users.

Mr. Wang, a food merchant: The Bargain Group is a low-priced package activity, which needs to be particularly cheap. For example, 9.9 yuan, or even a few yuan. The price difference is borne by us. At that time, we were drawn into the signature braised pork package, which sold relatively well. Normally we sell it for 28 yuan, and our cost per order is about 15.8 yuan. However, for this Bargain Group activity, our net price is 9.9 yuan, so we end up losing about 5 to 6 yuan per order.

Mr. Wang introduced that he participated in the platform’s Bargain Group activity for ten days, selling about 1,000 orders of braised pork packages, resulting in an actual loss of over 5,000 yuan. The report pointed out that after the platform signed an operational authorization agreement with the merchant and obtained their authorization, it could modify product prices without further consent from the merchant.

According to the merchant, this so-called operational authorization agreement was signed without his knowledge. But even if such an agreement was signed, can the platform bypass the merchant and directly modify product prices?

Zhang Chenying, Professor of Law at Tsinghua University and Director of the Competition Law Research Center: First, the merchant signing such an agreement is an act of authorization. The problem is that the merchant cannot modify prices according to their own pricing intentions, and the platform’s market manager can independently judge price levels or require participation in activities, which has, to some extent, exceeded the boundaries of reasonable authorization.

The report from the Beijing Municipal Administration for Market Regulation clearly pointed out that the platform’s behavior infringes on the merchants’ right to operate independently. Next, regulatory authorities will conduct special governance on the operational behaviors of food delivery platforms to strictly regulate related activities.

In April last year, the battle over food delivery subsidies began. If the “Bargain Group” method requires merchants to bear all costs for low prices, then who is actually paying for the so-called “100 billion yuan subsidy” touted by the three major platforms? A detail revealed by the Beijing Municipal Administration for Market Regulation shows that if the merchant subsidizes 6 yuan, the platform subsidizes from 1 yuan; if the merchant subsidizes 8 yuan, the platform subsidizes from 2 yuan. In other words, the platform’s subsidies are largely borne by the merchants.

At the end of last year, a research team led by Professor Zhang Jun from Fudan University analyzed transaction data from over 40,000 catering merchants. The results showed that since the subsidy intensity increased on July 5 last year, while the total order volume of merchants for both food delivery and dine-in averaged a 7% increase, the total profit dropped by an average of 8.9%.

Zhang Jun, Dean of the School of Economics at Fudan University: The subsidy battle has led to a widespread phenomenon of decreasing bargaining power for merchants. To maintain individual merchant traffic, they need to significantly lower prices. So it appears that traffic and orders have increased, but the prices have significantly dropped. The actual revenue for merchants has not increased, and most importantly, profits have declined.

The food delivery battle has harmed not only merchants but also consumers and the health of the industry. According to data from the State Administration for Market Regulation: In 2025, the platform received a total of 505,000 complaints and reports regarding food delivery, a year-on-year increase of 14.1%, with food safety issues accounting for nearly 52%. Notably, the complaint and report volume in the third quarter increased by 23.8% year-on-year, marking the largest increase for the entire year. This period coincided with the most intense phase of the food delivery platform subsidy battle.

Over the past year, “anti-involution” has become a key term in the Chinese economy, with many industries saying no to low-price competition. However, the difference is that much of the “involution” in various industries is more about companies “involving themselves”; while the “involution” in platform economies not only involves themselves but also involves others and merchants. Under the pressure from food delivery platforms, countless catering merchants have been forced into a price-cutting frenzy, even losing money to gain attention, with orders increasing while income decreases.

A study from Fudan University shows that after the subsidy intensity increased in July last year, the total profit from merchants’ “food delivery plus dine-in” declined on average by 8.9%. If merchants can only operate at a loss, the outcome is either to close down or to cut corners and sacrifice quality. It’s not just food delivery platforms; the travel platforms that were also interviewed by Beijing authorities have been found to force hotels and homestays to continuously lower prices. We can’t help but ask: Why does platform economy always fall into the low-price “involution” trap, and what is the eventual outcome of such competition?

In the “involution-style” competition cases disclosed by the Beijing Municipal Administration for Market Regulation this week, besides food delivery platforms, some travel platforms are also involved.

This hotel’s cooperation with the travel platform is not exclusive supply of room sources, but the hotel must promise that its prices on that platform will be lower than on other platforms. If the hotel does not cooperate, the platform will directly intervene in the hotel’s pricing strategy by applying pressure over the phone or restricting traffic.

Mr. Hu, Sales Manager at a Beijing hotel: The platform pretends to be a customer, stating specific requirements, such as when to check in and asking about prices. At this point, the platform will compare prices from other platforms. If the price is lower than its own platform, then the hotel gets into trouble. The hotel has not fulfilled its promise of the lowest price, and its traffic ranking will drop to the lowest level. To search for this hotel, you have to type its full name exactly in the search bar, otherwise, it will not show up.

For this hotel, 30% of its customer base comes from various platforms. If it breaks away from the platform, the customer flow will inevitably decline significantly, leaving many merchants seemingly without a choice.

Zhang Jun, Dean of the School of Economics at Fudan University: If I serve one more consumer without increasing costs, theoretically I can win the entire market. The market share of the platform can expand indefinitely, and there are no costs to hinder the expansion of the platform’s market share. This is also why platforms are willing to spend heavily on vicious competition, as they always hope for no competitors and wish that competing platforms are driven out, allowing them to gain a larger share.

Platform economy connects consumers with millions of small and medium-sized businesses and tens of millions of delivery workers and drivers. It concerns consumption and also influences employment and people’s livelihoods. The platforms’ “anti-involution” directly relates to the stability of the social economy.

Zhang Chenying, Professor of Law at Tsinghua University and Director of the Competition Law Research Center: First, the platform serves as a crucial hub for allocating demand and supply, enabling more effective resource allocation while reducing social redundancy. The second aspect is that, from a market efficiency perspective, those who rely on platforms for consumption are primarily ordinary people’s daily needs. Therefore, platforms are closely tied to our livelihoods and economy. The third aspect is that those who depend on platforms include many small and medium-sized businesses, numerous delivery workers, and consumers. Thus, platform rules and order are directly related to the overall social economy and its stability. Currently, platform “involution” has shifted from a situation of competitive efficiency to one of internal consumption.

This week, the Beijing Municipal Administration for Market Regulation reported that they interviewed a total of 12 companies, covering various platforms including food delivery, e-commerce, and short video services. Some commentators pointed out that this is not a scattered correction aimed at individual companies, but an “overall naming” of the platform economy and a thorough rectification of the phenomenon of platform “involution.” In fact, in this year’s government work report, the description of “involution-style” competition has shifted from last year’s “comprehensive rectification” to “in-depth rectification.”

Zhang Chenying, Professor of Law at Tsinghua University and Director of the Competition Law Research Center: In-depth rectification emphasizes a penetrating approach. Instead of addressing problems point-to-point or in a linear fashion, it involves considering deeper underlying logic and mechanisms, which leads us to examine what has happened with the platforms. Given the current state of platform development, why are there so many widespread and real issues? We need to consider these problems from platform rules, algorithm regulation, platform obligations, reasonable boundaries, and other deep-seated mechanisms.

Some may ask: If the platform’s rules are so unreasonable, why do merchants still stubbornly participate? The answer is unfortunate; whether it’s food delivery, e-commerce, or travel, platforms almost monopolize the vast majority of customer sources. If merchants do not join the platform or participate in activities, they lack traffic and thus customers. Yet once they are on the platform, they are compelled to accept various unreasonable rules. For example, some travel platforms use AI to monitor hotel prices in real-time, mandating minimum prices; if they do not comply, traffic is directly restricted. This is no longer normal competition but a technological deprivation of the merchants’ most basic pricing rights. “Anti-involution” is not against competition; it is precisely against this kind of improper competition. What will be the core and breakthrough point for governance?

On March 24, this Tuesday, the State Administration for Market Regulation held a symposium, stating that this year market regulatory authorities will continue to focus on deepening price supervision and rectifying “involution-style” competition. The next day, the official website of the State Administration for Market Regulation reprinted a media commentary article titled “The Food Delivery Battle Should End.” This has sparked public speculation about whether this year-long food delivery subsidy war is about to come to an end.

Shi Jianzhong, Dean of the Institute of Data and Legal Governance at China University of Political Science and Law: The food delivery battle should end. If we were to replace it with a synonym, it would be that ineffective, inefficient, and illegal competition in the food delivery sector should come to an end. The reason for such a substitution is to avoid interpreting anti-“involution-style” competition as anti-competition, because competition always brings prosperity, drives innovation, and maintains overall consumer welfare. Of course, once this effective mechanism is distorted, it goes against all good objectives. Therefore, it is necessary to curb “involution-style” competition, even using relatively severe measures to stop it.

How to distinguish improper competition must still be based on legal standards. The newly revised Anti-Unfair Competition Law of the People’s Republic of China, effective last October, stipulates: “Platform operators shall not force or indirectly force platform operators to sell goods at prices below cost according to their pricing rules, disturbing market competition order.” This indicates that in the food delivery battle, some platforms’ actions of forcing merchants to bear subsidies have already violated the law.

Zhang Jun, Dean of the School of Economics at Fudan University: It’s not that subsidies are not allowed; the amount of subsidies should be fully borne by the platform. First, it cannot be passed on to merchants; second, the subsidy amount is generally quite small, and it’s impossible to allocate such a large amount, which completely exceeds the optimal subsidy level needed to maintain market efficiency, consumer welfare, and merchant welfare, resulting in a situation where the costs outweigh the benefits and both sides suffer. Ultimately, the market shares for everyone may not change significantly.

Experts believe that the urgent task is to restore merchants’ autonomy in pricing. This week, the Beijing Municipal Administration for Market Regulation interviewed 12 platform companies and delivered Administrative Warnings, requiring strict adherence to principal responsibilities and timely rectification of related issues. For instance, regarding the food delivery platform’s behavior of modifying merchant prices in the “Bargain Group,” special governance on operational behaviors of food delivery platforms will be conducted; regarding the travel platform’s use of technology to automatically adjust prices, the platform has been urged to remove the “price adjustment assistant.”

Zhang Chenying, Professor of Law at Tsinghua University and Director of the Competition Law Research Center: From the perspective of market regulation, it has always been a gradient approach. For example, administrative guidance, pre-emptive interviews, commitments to rectify, and then to administrative penalties. This time, interviewing companies in the same sector together indicates that common problems have been identified. Administrative guidance has been given, which is actually more of a corrective mechanism.

Regarding the food delivery platform subsidy battle, in May last year, the State Administration for Market Regulation had already interviewed the three major platforms; in July, they interviewed them again; and just before this year’s Spring Festival, a third round of interviews was conducted. In January of this year, at a press conference of the State Administration for Market Regulation, relevant officials stated that the comprehensive rectification of “involution-style” competition had initially shown a positive trend of collaborative efforts, and phenomena such as platform “subsidy battles” and “lowest prices across the internet” have been curbed.

At the beginning of this January, the State Council’s Office of the Anti-Monopoly and Anti-Unfair Competition Committee announced an investigation and assessment into the competitive conditions of the food delivery platform service industry. Last week, the spokesperson of the State Administration for Market Regulation introduced the latest developments, stating that regulatory authorities have visited relevant food delivery platforms to conduct on-site investigations and comprehensively collect information. The next step will be to gain a deeper understanding of competitive behaviors of food delivery platforms, organize analysis and discussion, transmit regulatory pressure, and study and propose corresponding measures.

Shi Jianzhong, Dean of the Institute of Data and Legal Governance at China University of Political Science and Law: The government’s toolbox is also diverse, with some tools having strong punitive, sanctioning, and deterrent effects. Others may focus on corrective effects, procedural effects, and some may have preventive effects. In response to anti-“involution-style” competition behaviors, targeted strategies should be based on effects, harm, and legality, with precise measures.

When the platform economy first emerged, we applauded its convenience and efficiency. Yet, over the past decade, we have increasingly found ourselves trapped by the platform economy, with catering merchants being constrained by rules, delivery workers being constrained by algorithms, and even the platforms themselves caught in “involution.” How to break out of this predicament may not have shortcuts, but must return to a lawful market environment. Ultimately, good products should have good prices, and good services should have good returns; the interests of platforms, merchants, and consumers must all be protected—this is how the platform economy should be.

Source: CCTV News Client