SHANGHAI Feb 27 The Shanghai city government
has followed Beijing's lead and moved to restrict the usage of
increasingly popular taxi booking apps, putting investments into
the technology by foreign and Chinese companies at risk.
Taxi booking apps essentially allow customers and drivers to
cooperate to break through government price controls on fares to
negotiate a market price for transportation.
The apps usually allow users to bid for cabs by adding an
additional flat fare but they do so at the expense of cab
companies that provide dispatch services to the cabbies.
It has also resulted in complaints that Shanghai passengers
are having increasing difficulty hailing cabs on the street,
because many refuse to pick up customers paying normal fares.
Instead taxi drivers cruise the streets with their eye on a
collection of cell phones mounted on their dashboards running
different apps, all searching for fare bids.
Chinese internet giant Tencent Holdings Ltd has
developed a function in its popular Wechat messaging system that
allows customers to book and pay for cabs using its e-payment
mechanism, and refunds a portion of the fare to the user.
Analysts say the app was developed in part to help Tencent
compete with rival e-commerce giant Alibaba for a share of the
online payment market, which Alibaba's Alipay product dominates.
Alibaba has also invested in a popular cab-hailing app.
Neither Tencent nor Alibaba immediately responded to
requests for comment.
The new regulations, published on the website of the
Shanghai Municipal Transport and Port Authority, bans the use of
taxi booking apps by cab drivers during rush hour periods and
bans their use entirely by private vehicles licensed for hire.
This last regulation likely applies to services like
U.S.-based Uber, which recently launched in Shanghai and other
Chinese cities, and allows passengers to book private cars.
Uber did not immediately respond to requests for comment.
Drivers are also not allowed to use the apps while driving,
and can be fined for refusing to pick up ordinary fares.