Meituan's Algorithm Reform: A Shift from Penalties to Incentives

Meituan’s latest announcement marks a significant shift in China’s food delivery industry, addressing long-standing concerns about rider welfare and algorithm transparency. The platform’s decision to eliminate overtime penalties by 2025 represents a fundamental change in its approach to rider management.

At the core of this reform is the transition from a punishment-based system to an incentive-driven model. Historically, riders faced financial penalties for late deliveries, often pushing them to take dangerous risks in traffic. The new system will focus on rewarding timely deliveries rather than punishing delays.

This change comes amid growing scrutiny of labor practices in China’s gig economy. The platform’s commitment to algorithm transparency, including establishing a dedicated algorithm disclosure zone and hosting quarterly algorithm symposiums, demonstrates its response to public concerns about the “black box” nature of delivery assignments.

However, industry experts and riders have expressed mixed reactions. While some praise the move toward positive reinforcement, others worry about potential hidden implications. The platform may introduce new performance metrics or adjust base delivery fees to maintain efficiency, potentially affecting rider earnings in different ways.

The reform includes several key components beyond penalty elimination. Meituan will implement an anti-fatigue system, initially tested in Eastern China, to prevent excessive continuous working hours. The platform also plans to enhance route optimization technology and improve address accuracy to help riders complete deliveries more efficiently.

This transformation reflects broader changes in China’s approach to platform economy regulation. With the government emphasizing corporate social responsibility and worker protection, Meituan’s reforms align with national policy directions while attempting to balance business efficiency with rider welfare.

The success of these changes will largely depend on implementation details, particularly how the new incentive structure compensates for the removed penalties. For riders earning over 7,354 yuan in first-tier cities and 5,556 yuan in lower-tier cities, the impact on their income stability remains a crucial concern.

These reforms also highlight the evolving relationship between technology platforms and their workers in China. As algorithms become increasingly central to workforce management, the push for transparency and fairness in these systems represents a significant step toward more ethical platform governance.

Looking ahead, the effectiveness of Meituan’s reforms will likely influence similar changes across China’s gig economy sector. The balance between delivery efficiency, rider welfare, and platform profitability continues to be a critical challenge that will shape the future of food delivery services.