Meituan to End Late Delivery Penalty Amid Regulatory Crackdown on Algorithm Misuse
Chinese food delivery giant Meituan has announced plans to phase out its late delivery penalty by 2025, in response to increased regulatory scrutiny on the misuse of algorithms by internet platforms. The Beijing-based company stated that it aims to enhance its management practices and develop fairer incentive mechanisms after eliminating the fine, as per a notice on its website.
The decision is part of a broader strategy to motivate food delivery riders for timely deliveries rather than penalising them, Meituan highlighted. The company is set to revamp its algorithms governing operational procedures for its couriers, from order pickups to delivery routes, to ensure efficient service.
While the algorithms and late delivery penalties have helped Meituan maintain a competitive edge over rivals like Alibaba Group Holding’s Ele.me, they have also stirred controversy. The strict deadlines previously led couriers to flout traffic regulations, resulting in accidents. Meituan's notice mentioned plans to provide safety guidelines for couriers, promoting adherence to traffic rules and collaboration with local authorities to reduce violations and accidents.
In a bid to address concerns over rider fatigue, Meituan and Ele.me recently introduced new features to alert or log out couriers working excessively long hours. This move comes amidst a growing number of individuals in China turning to the gig economy amid economic challenges, raising issues about social insurance, welfare, and legal rights for these workers.
According to Meituan's data, the platform's 7.45 million delivery workers earned a total of 80 billion yuan (US$11 billion) last year, with approximately 60% covered by occupational injury insurance. The gig economy workforce in China has surged to 200 million over the past three years, constituting about 23% of the country's working population, according to the National Bureau of Statistics.
In November, Chinese regulators initiated a three-month campaign targeting algorithm-related misconduct by internet platforms. The campaign, involving authorities such as the Cyberspace Administration of China, the Public Security Ministry, and others, aims to address issues like content manipulation, prioritisation of profit over employee welfare, and misuse of consumer data for unfair pricing practices.
As the campaign concludes on February 14, the industry awaits further developments in how internet platforms in China will adapt to the evolving regulatory landscape.
Meituan to phase out late delivery penalty by 2025 to enhance courier incentives.
Company aims to improve algorithm governance for operational efficiency.
Regulatory crackdown on algorithm misuse prompts changes in gig economy practices.
Source: SCMP