Meituan burns seven billion yuan a quarter to lock you inside its app.
It is true, and the first-quarter accounts bear it out, that Meituan is currently absorbing a 6.83-billion-yuan net loss on 91.04 billion yuan in revenue — its third consecutive quarterly loss — and that JD.com and Alibaba are matching the spending dollar for dollar. The analysts expected an even wider deficit; the fact that the loss narrowed to under seven billion yuan was enough to push the stock up 6.5 per cent on the Hang Seng. The market’s reading is that the subsidy is working.
The trouble, and here it is worth being precise about what “the discount” actually is — because the financial press has the misleading habit of treating a platform price war as ordinary competition — is that the money is not being burned to discover the right price. The money is being burned to maintain the chokepoint. Meituan is not losing money because it is inefficient; it is losing money because it has chosen to, because the immediate cost of discounts is, in its own calculus, the entry fee to a future in which it faces no meaningful competition and can set terms accordingly. What you are looking at is the sequence Cory Doctorow named enshittification: be good to users to lock them in, be good to business customers to lock them in, extract value from both for shareholders, and then die. Meituan is still in the first act, but the investor presentation that accompanied Monday’s results makes the arc plain. The rider gets the order. The restaurant gets the sale. You get the subsidized meal. The platform absorbs the gap, betting that the user who learns to rely on the app today will not price-shop when the subsidy turns off tomorrow.
And here is the mechanic that the quarterly revenue number papers over. The dispatch algorithm is not a neutral routing tool. It is, in operational terms, a real-time automated monopsony wage-setter, calculating the minimum fee a gig worker will accept for a specific route at a specific minute and offering that exact sum. Veena Dubal calls this algorithmic wage discrimination, but in practice it is simply a programmable speedup. The platforms do not care if the delivery network is profitable in the aggregate. They care that the algorithm can depress the per-order fee to the rider just enough to keep the platform margin from collapsing entirely while the discount burns. This is not a prediction. The pattern has been documented across platform economies: below-cost pricing, sustained by investor tolerance, as the first step toward monopoly rent extraction. The Chinese market is different in its specifics, but the financial logic is the same logic that built the American delivery duopoly of DoorDash and Uber Eats, which burned through venture capital for years before raising commission rates well into the double digits.
The tendency is to treat the price war between the hyperscale tech platforms and the local logistics aggregators as a question of corporate strategy. Alibaba recently demonstrated the parallel dynamic, posting surging cloud revenue alongside falling profits because the capital expenditure required to hold the infrastructure layer outweighs the near-term return. Meituan is doing it for the last mile. The effect on the ground is identical: the upstream capital deployment subsidizes the consumer, compresses the independent contractor, and forces the smaller operators out of the market because they cannot float the loss. When JD enters the space with its own logistics network, the result is not a flourishing of choice. It is a hardening of the walls around the three largest gardens. The food-delivery price war is the platform-economy version of the predatory pricing of the railroad era, except that the rails are digital and the victims are not other railroads but the merchants and labourers who depend on the platform for access to customers.
The delivery workers who ride electric scooters through the rain and the small restaurants that pay the platform’s commission are not participants in a price war; they are the inventory that the price war is being fought over.
Doctorow’s framework names the digital instance of a more general phenomenon that an older generation of labour economists called asset-stripping and that an older generation of Canadian heavy-industry workers called something considerably less euphemistic. The continuity matters, because the responses available now are the same ones the labour movement reached for when the playbook arrived north of the border in the late nineteen-nineties. The remedy is not found in slower-moving antitrust proceedings, which focus on mergers rather than conduct. It is found in mandated interoperability for the dispatch layer, the digital equivalent of the sectoral bargaining that protected workers from the speedup. If a regulator required the dispatch API to be open, a courier could carry a single dashboard that routed orders from Meituan, JD, and Alibaba simultaneously, forcing the platforms to compete on the quality of the payout rather than the opacity of the algorithm. The platforms resist it not because it is technically difficult, but because it removes their exclusive hold on the supply of labour.
The stock rose because the market understands that the platform winning the subsidy war owns the neighbourhood. The loss is not a sign of weakness. It is a down payment on the tolls the platform intends to collect once the alternatives have been starved. The subsidy will end when the competing apps are driven out, which is exactly when the algorithm will resume raising the commission on the restaurant and cutting the fee to the rider. Meituan’s management has been candid enough to show the arithmetic: a few years of red ink in exchange for a lifetime of pricing power. The dispatch queue does not care about quarterly profitability; it only cares that the capital injection is still active, and that the rider will be at the door before the food gets cold.