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

Translating from Chinese to American English…

From: CCTV News Client

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

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

This series of actions indicates that this carnival under the banner of “low prices” is coming to a close. Why do platforms spending money on subsidies harm the interests of merchants? What is the truth behind this? How do the various tricks of platform “involution” affect the survival of small and medium-sized businesses, and how should these practices be corrected to return to fair competition? This week’s focus of “News Weekly” is on: the food delivery war, its results, and the truth.

On a food delivery platform, a hand-made dumpling set priced at 18 yuan only allows the merchant selling dumplings to receive 1.25 yuan. In Beijing, this amount of money can’t even buy a single dumpling skin. This is a typical example of “involution-style” competition reported by the Beijing Municipal Market Supervision Administration this Monday.

Wang Bo, Director of the Network Transaction Supervision Office of the Beijing Municipal Market Supervision Administration: The platform mainly infringes on the merchants’ right to operate independently, setting unreasonable rules. For example, some platforms arbitrarily alter the prices of merchants within the platform and unilaterally launch promotions, severely infringing on the merchants’ right to operate independently.

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 Market Supervision Administration disclosed that a certain food delivery platform listed products in a promotional campaign called “Bargain Group” without negotiation, setting extremely low prices to attract users.

Mr. Wang, a food delivery merchant: The Bargain Group is a low-price package activity that needs to be particularly cheap. For example, 9.9 yuan, or even just a few yuan. The price difference is borne by us. At the time, we were drawn into it with our 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, in this Bargain Group activity, our take-home price is 9.9 yuan, which means we are losing about 5 to 6 yuan on each order.

Mr. Wang explained that he participated in the platform’s Bargain Group activity for ten days, selling about 1,000 braised pork packages, resulting in an actual loss of over 5,000 yuan. The report pointed out that after signing an operational authorization agreement with the merchant and obtaining their authorization, the platform can 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 the product prices?

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

The report from the Beijing Municipal Market Supervision Administration clearly pointed out that the platform’s behaviors infringe on the merchants’ right to operate independently. In the next steps, regulatory authorities will carry out special governance on the operational behaviors of food delivery platforms, strictly standardizing relevant platform behaviors.

In April last year, the battle over food delivery subsidies began. If the “Bargain Group” tactic makes merchants bear the cost of low prices, then who pays for the three major platforms’ so-called “100 billion yuan subsidy”? A disclosure from the Beijing Municipal Market Supervision Administration showed that for every 6 yuan subsidized by merchants, the platform subsidizes at least 1 yuan; for every 8 yuan subsidized by merchants, the platform subsidizes at least 2 yuan. In other words, the platform’s “red envelope” is largely paid for by merchants.

At the end of last year, Professor Zhang Jun’s research team at Fudan University analyzed transaction data from over 40,000 catering merchants. The results indicated that since the increase in food delivery subsidies on July 5 last year, while the total order volume of merchants’ food delivery plus dine-in increased by an average of 7% daily, total profits, however, decreased by an average of 8.9%.

Zhang Jun, Dean of the School of Economics at Fudan University: The subsidy war has caused a very common phenomenon where merchants’ bargaining power has diminished. To maintain individual merchant traffic, merchants need to drastically lower prices. So it seems like traffic has increased and orders have increased, but prices have fallen significantly. The actual revenue for merchants has not grown, and most importantly, profits have decreased.

The food delivery war has hurt not only merchants but also consumers and the health of the industry. Data from the State Administration for Market Regulation indicates that in 2025, platforms received a total of 505,000 complaints and reports about food delivery, a year-on-year increase of 14.1%, of which nearly 52% were related to food safety issues. Particularly noteworthy is that the complaint and report volume in the third quarter increased by 23.8% year-on-year, marking the largest increase in complaint volume for the year. This period coincided with the peak of the food delivery platform subsidy war.

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 in many industries, “involution” is more about companies “involving themselves”; whereas in platform economies, “involution” not only affects themselves but also others, including merchants. Under the pressure of food delivery platforms, countless catering merchants are forced into a price-cutting frenzy, even losing money to attract customers, resulting in increased orders but decreased income.

A study from Fudan University shows that after the increase in food delivery subsidies in July last year, the total profit from merchants’ “food delivery plus dine-in” decreased by an average of 8.9%. If merchants can only operate at a loss, the outcome can only be two: either close down or cut corners and sacrifice quality. Not only food delivery platforms but also the tourism and travel platforms that were interviewed by Beijing authorities were found to force hotels and homestays to continuously lower prices. We can’t help but ask: Why does platform economy always fall into the vicious cycle of low-price “involution”? What are the ultimate consequences of such competition?

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

This hotel’s cooperation with the tourism platform is not exclusive supply of accommodations, but the hotel must promise that their prices on this platform are lower than those on other platforms. If the hotel does not comply, the platform will directly intervene in the hotel’s pricing strategy through phone pressure and traffic restrictions.

Mr. Hu, Sales Manager of a Beijing hotel: The platform pretends to be a customer, stating specific requirements, asking about prices for check-in. At this point, the platform compares the prices on other platforms. If the price is lower than that on their platform, the hotel is in trouble. The hotel did not fulfill the promise of lowest prices, and their ranking for traffic will drop to the lowest. To search for this hotel, you have to type the full name of the hotel exactly in the search bar; otherwise, you won’t find it.

For this hotel, 30% of their customer base comes from various platforms. If they break away from the platform, customer flow will inevitably drop significantly, and many merchants seem to have no choice.

Zhang Jun, Dean of the School of Economics at Fudan University: If I serve one more consumer without increasing costs, then theoretically, I can win all. The market share of the platform can expand infinitely, as there are no costs to obstruct the expansion of the platform’s market share. This is also why platforms are willing to spend heavily on malicious competition because platforms always hope to eliminate competitors, desiring to suppress competing platforms to gain larger market shares.

The platform economy connects consumers on one end and millions of small and micro merchants and a vast number of delivery personnel on the other. It relates not only to consumption but also to employment and livelihood. The platforms’ “anti-involution” directly relates to the stability of the social economy.

Zhang Chenying, Professor at Tsinghua University Law School and Director of the Competition Law Research Center: First, the platform is a crucial hub for allocating demand and supply, making resource allocation more effective while reducing social redundancy. The second aspect is that in practical market terms, relying on platforms for consumption is more about the daily needs of ordinary people. Thus, platforms are closely related to our livelihood and economy. The third aspect is that those relying on platforms include numerous small and micro merchants, many delivery personnel, and consumers. Therefore, platform rules and order are directly related to the entire social economy and its stability. Currently, the “involution-style” competition of platforms has shifted from efficiency-based competition to a situation of internal consumption.

This week, the Beijing Municipal Market Supervision Administration reported that they have interviewed 12 companies covering various platforms, including food delivery, e-commerce, and short video platforms. Some commentators pointed out that this is not a scattershot correction for individual companies but a “comprehensive naming” of the platform economy and an in-depth 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 at Tsinghua University Law School and Director of the Competition Law Research Center: In-depth rectification emphasizes a penetrating approach. Instead of solving problems point by point or along a single line, it shifts to consider deeper logical and mechanism issues, asking what is wrong with the platform. Given the platform’s current development, why has there been such a widespread occurrence of so many real problems? It is essential to consider issues from the perspective of platform rules, algorithm regulations, platform obligations, and reasonable boundaries.

Some may ask: Since the platform’s rules are so unreasonable, why do merchants still participate? The answer is regrettable; whether in food delivery, e-commerce, or tourism, platforms nearly monopolize the majority of customer sources. If merchants do not go online, they lose traffic and customers. But once they join the platform, they must accept various unreasonable rules. For instance, some tourism platforms use AI to monitor hotel prices in real-time, enforcing minimum prices; if they do not comply, they directly restrict traffic. This is no longer normal competition but rather the use of technology to deprive merchants of their basic pricing rights. “Anti-involution” does not oppose competition; what it opposes is precisely this kind of unfair competition. What are the governance strategies, and where are the core and breakthrough points of the issue?

On Tuesday, March 24, the State Administration for Market Regulation held a seminar, stating that this year market regulatory agencies would continue to strengthen efforts in deepening price supervision, thoroughly addressing “involution-style” competition, and more. The following day, the State Administration for Market Regulation’s official website reprinted a media commentary article titled “The Food Delivery War Should End.” This has sparked public speculation about whether this year-long food delivery subsidy battle is about to come to a close.

Shi Jianzhong, Dean of the Data Law Research Institute at China University of Political Science and Law: The food delivery battle should end. If we were to replace it with a synonym, it should be that ineffective, inefficient, and illegal competition in the food delivery sector should come to an end. The reason for this replacement is to avoid misunderstanding anti-“involution-style” competition as anti-competition because competition always brings prosperity, promotes innovation, and preserves overall consumer welfare. However, once this effective mechanism is distorted, it goes against all good objectives. Therefore, it is necessary to curb “involution-style” competition and even employ relatively strict measures to stop it.

To differentiate unfair competition, legal standards must be the benchmark. The newly revised Anti-Unfair Competition Law of the People’s Republic of China, effective last October, stipulates: “Platform operators must not force or indirectly force operators within the platform to sell goods at prices below cost according to their pricing rules, disrupting market competition order.” This indicates that in the food delivery battle, some platforms’ coercion of merchants to bear subsidies has already infringed 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 entirely borne by the platform. First, it cannot be passed on to the merchants; second, the amount of subsidies is generally relatively small; it is impossible to allocate such a large amount, which completely exceeds the optimal subsidy level for maintaining market efficiency, consumer welfare, and merchant welfare, leading to a lose-lose situation. In the end, market shares for everyone may not see substantial changes.

Experts believe that the urgent need is to restore merchants’ pricing autonomy. This week, the Beijing Municipal Market Supervision Administration interviewed 12 platform companies and issued Administrative Warnings, requiring strict implementation of principal responsibilities and rectification of related issues within a specified timeframe. For example, in response to the food delivery platform’s modification of merchants’ prices in the “Bargain Group,” a special governance initiative will be launched; regarding tourism platforms using technical means to automatically adjust prices, the platforms have been urged to remove “price adjustment assistants.”

Zhang Chenying, Professor at Tsinghua University Law School and Director of the Competition Law Research Center: From the perspective of market regulation, it has always been hierarchical. For instance, administrative guidance involves prior interviews, commitments to rectify, and then administrative penalties at the backend. This time, interviewing companies in the same sector together indicates that common problems have been identified. It still provides administrative guidance, which is primarily a mechanism for correction.

Regarding the food delivery platform subsidy war, in May last year, the State Administration for Market Regulation had already interviewed the three major platforms; in July, there was another round of interviews; and just before this year’s Spring Festival, a third round took place. In January this year, at a press conference held by the State Administration for Market Regulation, relevant officials stated that comprehensive rectification of “involution-style” competition had initially shown good synergy. Phenomena such as the platform’s “subsidy war” and “lowest prices across the network” have been curbed.

At the beginning of January this year, the Office of the Antimonopoly and Anti-Unfair Competition Committee of the State Council announced an investigation and assessment of the competitive situation in the food delivery service industry. Last week, a spokesperson for the State Administration for Market Regulation introduced the latest developments, stating that regulatory authorities had gone to relevant food delivery platforms to conduct on-site investigations and collect information comprehensively. The next step will be to gain an in-depth understanding of food delivery platform competition behaviors, organize analysis and discussions, convey regulatory pressure, and research and propose corresponding disposal measures.

Shi Jianzhong, Dean of the Data Law Research Institute at China University of Political Science and Law: The tools available in the government toolbox are diverse; some are highly punitive, sanctioning, and deterrent, while others may focus more on corrective effects or preventive effects. For anti-“involution-style” competition behaviors, measures should be categorized based on effectiveness, harm, and illegality, and precise strategies should be implemented.

When the platform economy first emerged, we applauded its convenience and efficiency. Yet, over a decade later, we find ourselves increasingly trapped by the platform economy—catering merchants are constrained by rules, delivery workers are constrained by algorithms, and even the platforms themselves are trapped in “involution.” Finding a way out of this predicament may not have shortcuts; returning to a legal marketplace is necessary. Ultimately, good products should have good prices, and good services should receive good returns. The interests of platforms, merchants, and consumers must all be protected—that is how the platform economy should be.

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