The tech companies trying to break into China's taxi market have been dealt a setback as the Shanghai government flagged that it would limit the use of taxi-hailing apps in the city and ban their use during rush hour.
Apps that help users hail and pay for cabs with their smartphones have taken off in China, and have become the site of a proxy war for dominance in the country's lucrative mobile payments market.
(Read more: Is China getting ready to widen the yuan's band?)
Bad traffic and high demand for cabs makes hailing them on the street difficult – a problem that the apps addressed by allowing users to offer drivers additional tips to accept them as passengers.
Apps backed by local internet giants Tencent and Alibaba also offer generous subsidies to users as the companies try to grab share in the burgeoning market.