The Shanghai Municipal Transport and Port Authority has decided that from March 1, taxis will be forbidden from using taxi app services during morning and night peak hours. This could mark the end of the battle between China's taxi app operators, China News Service reports.
In certain cities, taxi app operators may be obliged to join municipal taxi calling service platforms as ordered by the government.
Alibaba Group and Tencent Holdings, two of China's internet giants, are neck-and-neck in a turf war over the taxi app market. On Jan. 20, Tencent's Didi, its taxi hailing service, announced a plan to add 200 million yuan (US$32.5 million) to its budget. The next day, Alibaba's Kuaide counterpart swiftly announced an additional 500 million yuan (US$83 million) investment for improving hailing services, Shanghai's China Business News reported last month.
Together, the two giants have subsidized more than 1.9 billion yuan (US$309 million) for their apps, statistics showed. The taxi app operators have yet to create an effective profit model, draining directly from parent comapnies instead. Such leeching can last for at most another month, experts said.
The money-burning battle could end immediately. Yesterday, Alibaba founder Jack Ma suggested that the two tax app operators sit down and talk about how to operate more smartly further down the road. Experts said Ma's remarks indicate that drastic market competition will eventually calm over. Many Tencent Weibo users also expressed their belief that subsidies for taking taxis will soon come to an end.
On the other hand, Didi's public relation department told the reporter that its subsidies are long-term activity, and more actions are to be taken. No elaboration was given.
The Shanghai regulator also decided to include the taxi app business into the city's taxi calling service platform, a move praised by more than half of responding internet users in a survey. Beijing, Nanning and Chengdu have all ruled similarly, with quite a few other cities saying they have not ruled out the possibility of unveiling similar measures.
Both taxi app operators immediately said they will follow the Shanghai regulator's ruling, and both plans to complete their technical linking with the city's taxi calling service platform on March 10.
