The battle for the food delivery market is intensifying, with major platforms employing aggressive tactics against each other. Following earlier reports about Hello's "Project Falcon", Meituan is now facing allegations of offering payments to collect damaging information on competitors.
A recent investigative report has revealed that the controversial "¥1.25 ultra-cheap dumplings incident", which led to Taobao Quick Buy being publicly criticized earlier this year, may have involved orchestration by Meituan. The report alleges that Meituan staff, under the guise of market research, contacted restaurants across Beijing to solicit negative information about Taobao Quick Buy, offering "incentive funds" to cooperating merchants.
Unpacking the Controversy
The story dates back to February, when media reports highlighted a hand-made dumpling shop allegedly forced by a platform to participate in a promotion, selling ¥18 dumplings for a net receipt of only ¥1.25 per order, failing to cover ingredient costs. The reports pointed directly at Taobao Quick Buy's "Hot-Selling Group" feature. The ensuing public outcry led to Beijing's market regulator citing it in March as a typical case of infringing on merchants' operational autonomy, criticizing Taobao Quick Buy for unilaterally listing activities, modifying prices, and providing inadequate rectification.
The new investigation, however, suggests this incident was part of a planned commercial competition strategy with incentives, allegedly orchestrated by Meituan. Several merchants confirmed participating in Meituan's research, providing details about Taobao Quick Buy changing prices without consent, and receiving rewards afterwards. The manager of the cited "Happy Dumplings" store stated that after discovering an abnormally low price on the "Hot-Selling Group", a Meituan business manager requested related materials, which were then used to file a complaint against Taobao Quick Buy, earning a ¥5,000 reward.
Rival's Response and Wider Context
Following the report, Taobao Quick Buy expressed being "shocked and angry". It referenced a recent Sichuan police case involving a company allegedly hiring agencies to systematically fabricate false information to smear Taobao Quick Buy and JD Delivery, hinting at a connection.
Objectively, the ¥1.25 dumpling incident was not fabricated; Taobao Quick Buy did have违规 operations that harmed merchant rights, providing a basis for negative publicity. However, from a commercial competition standpoint, Meituan's alleged actions of paying for negative leads and guiding merchant complaints appear to go beyond normal market competition. While Taobao Quick Buy has issues, Meituan's tactics are also questionable. During the investigation, some merchants who participated in Meituan's survey also complained about orders from Meituan that failed to cover their costs.
This "shadow boxing" between the two delivery giants reflects the fierce battle for market share in the crowded local services and food delivery sector. The entry of JD.com and the升级 of Ele.me to Taobao Quick Buy have intensified competition, primarily targeting market leader Meituan. This price war has taken a severe financial toll. After earning ¥35.8 billion in 2024, Meituan reported a loss of ¥23.36 billion in 2025 for its local commerce segment, which includes its core food delivery business, representing a staggering swing of nearly ¥59.2 billion.
There are no clear winners in this subsidy war. In 2025, JD.com's new business segment, which includes its delivery service, reported an operating loss of ¥46.64 billion. Alibaba's investment and losses were also staggering, with its China Commerce Group's adjusted EBITA falling by ¥70 billion year-over-year. In total, the three platforms are estimated to have foregone over ¥170 billion in profits due to the delivery war, with Alibaba seeing the largest impact.
The Merchant Squeeze
While platforms burn cash and see profits evaporate, the cost is largely transferred to restaurant merchants, making small and medium-sized businesses the most vulnerable and affected group. Even before the current war, merchant margins were under pressure. Meituan's revenue primarily comes from delivery services, commissions, and online marketing services—all heavily reliant on merchants. A reduction in delivery subsidies from 2024 increased the burden on both merchants and consumers. While delivery service revenue declined, commission and online marketing service revenues grew, indicating more money is being extracted from merchants.
A study by Fudan University supports this, finding that after subsidy increases in July 2025, while total daily delivery and dine-in orders for over 40,000 merchants grew by 7%, their total profits fell by 8.9%. More orders and higher turnover are translating into less profit for many restaurants.
As the delivery war escalates, the negative effects of industry内卷 deepen, with merchants ultimately bearing the brunt of the platform competition. The ¥1.25 dumpling incident, while potentially fueled by inter-platform rivalry, was based on factual violations. It reflects how the later stages of the delivery war have evolved from "platforms spending, consumers benefiting" to "forcing merchants to bleed to help platforms acquire customers," causing unprecedented shock to the catering industry.
Authorities have recently been calling for an end to the subsidy war. However, competition in the local services battlefield is unlikely to cease. Rumors of Alibaba considering an acquisition of PuPu Supermarket and Meituan aggressively promoting its Xiaoxiang Supermarket in multiple cities suggest new fronts are emerging in the conflict.
Comments