Chinese food delivery giant Meituan was hit with a lawsuit from the Beijing Intellectual Property Court alleging monopolistic practices after the app removed Ant Group’s Alipay as a payment channel in July, according to a court filing.
Meituan’s apps support other payment options, including major backer Tencent’s WeChat Pay, Apple Pay, and the company’s own Meituan Pay. In previous versions of Meituan’s food delivery app, Alipay was hidden on the checkout interface, steering users toward other transaction methods, before it was removed entirely in June. Meituan is now being sued for alleged abuse of its dominant market position.
The lawsuit, between the plaintiff surnamed Wang and Meituan’s parent company Beijing Sankuai Technology, was accepted by Beijing Intellectual Property Court on September 10, 2020, Ceweekly, an economy-focused media outlet affiliated with People’s Daily, reported on Tuesday.
Meituan declined to comment when KrASIA approached the company about the lawsuit.
Around the time of Alipay’s removal from Meituan’s app, Meituan’s founder and CEO Wang Xing seemed to call out Alibaba for similar abuse, posting on social media platform Fanfo about how shoppers on Alibaba’s e-commerce platform Taobao couldn’t use WeChat Pay.
Ant Group’s Alipay and Meituan have been in direct competition since Alipay’s strategic pivot in 2019 from a financial services platform to a super app covering a range of on-demand services for its 1.3 billion users.
The lawsuit comes as regulators in Beijing take a tougher stance to regulate the country’s largest tech firms. China’s market regulator said this month that it would tighten regulations for the country’s burgeoning community group-buying sector, where deep-pocketed tech giants such as Didi, Meituan, and Pinduduo use extremely low prices to attract customers—and place pressure on smaller existing grocery retailers.
“The principles and rules under the Draft Guidelines on Platform Economy [developed by the State Administration for Market Regulation] stem from and conform with existing antitrust laws and regulations. Thus, its release will not create a brand new regulatory regime, but rather will provide the enforcement authorities and market participants with more clarifications and guidance on the application of the existing anti-monopoly laws,” said Shi Da, a senior consultant at Han Kun Law Office, which has Meituan as a client.
“The internet giants have been dealing with antitrust risks long before the release of the Draft Guidelines. While we don’t expect to see any major changes in their future conduct or any significant impact on their business models, as a result of the latest enforcement actions, the top internet platforms will be more prudent in adopting aggressive expansion plans or imposing business terms on their counterparties,” Shi said to KrASIA.
As of November 30, Meituan had 6.5 million annual active merchants on its platform and 480 million annual active users. The company has been criticized by regulators for abusing exclusivity agreements, prompting backlash from restaurant trade associations as well.