China Orders Didi, Meituan to Rectify Ride-Hailing Abuses
(Bloomberg) -- China’s antitrust watchdog ordered Didi Chuxing, Meituan and eight other leaders in on-demand transport to halt practices from arbitrary price hikes to unfair treatment of drivers, expanding a crackdown on the country’s internet giants.
Regulators including the State Administration for Market Regulation and transport ministry summoned executives from the 10 companies, which included shipping services Full Truck Alliance and Huolala, to a meeting Friday, the state-backed China Transport News reported. The companies were criticized for violating drivers’ interests and perpetuating a monopoly on freight data, among other issues, and asked to fix those problems.
The meeting suggests Beijing’s campaign to curb the growing influence of its internet firms is spilling over into the giant on-demand sector, which employs and serves millions nationwide. Much of the passenger-rides market is dominated by Didi, the SoftBank Group Corp.-backed startup that drove Uber out of China and has filed confidentially for an initial public offering that could value the company at as much as $100 billion.
The Chinese ride-hailing company last week vowed to improve its payment structure for drivers and fares for users, responding to media criticism and increased government scrutiny of dominant tech companies. Drivers on Didi’s ride-sharing network on average earn 79% of what customers pay, it said in a statement last Friday. The company took a 30%-plus cut of 2.7% of the trips on its platform and said it would “try our best to prevent these extreme cases from happening.”
The pledge came after criticism from the public and in the state media about Didi’s dominance of the country’s ride-sharing space. The official news agency Xinhua asked in a commentary last week why the company’s users are paying more fares and drivers are making less, calling on regulators to look into the platform’s pricing mechanisms.
Didi’s ride-railing business has turned profitable, with a net margin of 3.1% for 2020, according to the earlier statement. It’s stepping up efforts to increase its presence in strategically important sectors like autonomous driving and technologies including artificial intelligence chips.
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