People in China's most populated city can no longer use apps to get cabs during rush hour.
The city government in Shanghai recently followed in Beijing's footsteps by banning taxi-hailing apps from7:30 to 9:30 a.m. and 4:30 to 6:30 p.m. local time because they affect the "fairness of the taxi industry," according to CNN. The government's statement on Wednesday about the new regulations also alleged that any privately owned cabs can never use the apps.
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The ruling is a blow to corporate investment giants Tencent and Alibaba, which had each backed separate popular taxi apps, according to Reuters. Tencent's Didi Taxi and Alibaba's Kuaidi Taxi dominate the Chinese market, which has garnered around $43 million in investments over the past two years.
The apps allow customers to bid for taxis by offering increasingly higher flat-rate fares in addition to the cost per mile, allowing people to subvert taxi costs set by the government. But the Chinese population seems to have a divided opinion of them. Reuters reports that some drivers won't get behind the wheel unless people can use the apps, but others believe it has created an unequal playing field in the fight to hail a ride. Some drivers have reportedly refused to pick up passengers who won't offer a higher fee than the standard fare.
That won't happen anymore, though. Shanghai's new regulations stipulate that cabbies won't be able to use the apps while driving and can be fined for not picking up passengers who won't pay extra.
The timing could not be worse for U.S.-based Uber, a taxi hailing app infamous for surge pricing. Uber launched in Shanghai just two weeks ago, though it had already been running a pilot program.
Uber has been testing the waters in other Chinese cities, too, including Hangzhou, Nanjing and others, though these restrictions and the competition from Didi Taxi and Kuaidi Taxi make the market a difficult one to break into.
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