After following Beijing’s lead in banning the bidding feature of taxi apps last year, Shanghai city government recently released another ban to tighten the regulations on taxi-hailing apps (via Tech Sina).

New rules released by the Shanghai Municipal Transport and Port Authority prohibited the use of booking apps by taxi drivers during rush hours (7:30 am to 9:30 am; 4:30 pm to 6:30 pm) and banned their use entirely by private vehicles licensed for hire. The new regulations will take effect from March 1 and Beijing may release similar policies latter on.

The new rules will also prohibit drivers from answering phone calls and using mobile devices while carrying a customer, as well as preventing the apps from sending messages to drivers who have already picked up a customer. Cab drivers who refuse to act responsibly may be slapped with up to 15-day suspension or hefty fines.

After the fierce competition last year, the taxi app market is now dominated by Didi Dache and Kuaidi Dache, which is ventured backed by Tencent and Alibaba respectively. The two apps hold a combined 90% the market by daily taxi app orders last year, according to iResearch.

In order to gain bigger market share, the price war between these two apps escalates from the beginning of this year with both parties boosting cash rebates to taxi drivers and customers to new heights.

As a countermeasure for the governmental ban on taxi apps, Alibaba just announced that AliPay users who take taxis in rush hour can pay via AliPay Wallet’s QR bar scanning feature, which allows customers continue to enjoy 13 yuan cash rebate per ride without opening taxi apps.

In addition to capital supports, the two internet giants also integrated the taxi apps into their flagship services to attract bigger user base. Didi Dache is integrated into Tencent’s IM tool WeChat, while Kuaidi Dache is linked to Alibaba’s leading payment application Alipay.

Didi Dache reportedly spent 400 million yuan ($65.28 million) of cash rebates in the one month period ended in Feb 9, claiming to distribute 1 billion yuan in total. Its registered users doubled to more than 40 million compared with the figure before the promotion, according to vice president of the company Zhang Jing.

Kuaidi Dache disclosed that it had spent more than 100 million yuan as of early Feb., while its daily orders have surged to 6 million per day as of present from 500K at the end of last year. To ease the pressures on servers caused by rapid growth of data, Kuaidi’s data will be transferred to the cloud computing platform developed by Ali Cloud, the firm recently announced. Both of the two companies claimed that they will continue the battle.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.