A few years from now, many may look at the past few months as a defining period for internet services giant Meituan Dianping.

The national lockdown due to the Covid-19 pandemic has hit the heart of businesses the company relies on – such as movie theaters, hotels, and restaurants. That led CEO Wang Xing earlier this year to give a stark warning that Meituan could swing back into the red after reporting quarterly profits last year for the first time since going public in June 2018.

More significantly, Covid-19 could become a test of Meituan’s relationship with the millions of merchants that use its marketing services and delivery fleet to reach customers.

Since the Covid-19 outbreak early this year, the company has been the subject of criticism by a series of industry organizations across the country, which called for it to help restaurants and for them to “go through the hardship together”. Meituan has also been accused of charging merchants excessive commission fees and using its near-monopoly market status to force them into signing exclusive contracts.

This is a defining event for Meituan, which now needs to “redraw a line” in terms of the distribution of interests between the company and merchants who use its services, said an employee with rival Alibaba Group Holdings Ltd. “If Meituan deals with it well, its business model will prevail (for years to come)”, the employee said.

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Contact reporter Mo Yelin (yelinmo@caixin.com)

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