On-demand service platform faces lawsuit for alleged abuse of market power

Meituan, China's largest on-demand service platform handling online food deliveries and restaurant orders, is facing a lawsuit in a Beijing court for alleged abuse of market power, amid China's ongoing scrutiny of key technology sectors, including the internet.

The antitrust case, filed by a person surnamed Wang, has been accepted by the Beijing Intellectual Property Court, according to an official court notice. The complainant said that Meituan's decision to temporarily remove Alipay, the payment platform of Alibaba, as a payment option from its main app, was an abuse of its dominant market position.

Beijing Sankuai Online Technology Co and Beijing Sankuai Information Technology Co, the registered company names of Meituan, have been charged with preventing customers from using Alipay as a payment option on Meituan apps and platforms. Several netizens had complained in July that Meituan was restricting payment options on its platforms and prioritized its own payment services, along with WeChat Pay and ApplePay options.

Industry experts said anticompetitive measures will not help companies gain market share in the long run and said that scrutiny on top technology firms is a "worldwide trend" for the healthy and dynamic development of emerging industries.

Alipay payment options are available to certain users of the Meituan app, but only as a folded option, as of Wednesday. Some iPhone X and iPhone 12 users said Alipay was not available, even with the latest version of Meituan apps.

"Such behavior should be seen as a monopoly as it violates the interests of consumers. China's platform economy comes on the heels of a faster-than-expected development of the internet sector. Though the sector saw widespread development, there was hardly any regulation," said Wang Peng, an associate professor of the Hillhouse Research Institute at Renmin University of China.

"Anticompetitive measures do not help companies to stand out. In the long term, they are expected to leverage product, content or technology to generate fresh growth engines," Wang said.

You Yunting, a senior partner with DeBund Law Offices, said it remains to be seen whether blocking a competitor's link would be deemed a monopolistic measure, based on the current laws and regulations.

"Potential reasons for not considering the case as a monopolistic action stems from the contention that if Meituan opens its payment channel to Alipay, it might lead to Meituan's own business data being grabbed by competitors," he said.

Yet another factor that could have triggered the lawsuit is the fierce competition among Chinese tech giants. Similar cases are seen in other major payment channels also. For instance, WeChat Pay of Tencent is not available on Alibaba's Taobao while there is no Alipay on JD app's payment options.

Authorities had vowed during the Central Economic Work Conference to intensify anti-monopoly supervision. In a guideline published by the State Administration of Market Regulation in November, the antitrust watchdog said it will abandon "picking one from the two" practice, which forces online merchants to choose only one platform as their exclusive distribution channel.

"The guideline is not made for one or two tech giants and is not aimed at tripping over one leading firm. It is made for the overall development of the industry and for industrial innovation," said Song Jia, director of the machinery innovation center affiliated with the State-owned Assets Supervision and Administration Commission.

Sun Nanxiang, a researcher from the Institute of International Law of Chinese Academy of Social Sciences, said that antitrust measures are a worldwide trend.

"For governments globally, the ultimate purpose is to leverage legal tools to restore fair and effective competition in the market to stimulate innovation and entrepreneurship and at the same time, maximize the protection of consumers' interests," Sun said.