China has banned drivers of private cars from offering services through ride-hailing apps, throwing up a new hurdle to Uber Technologies Ltd.’s global expansion.<\/p>\n
Only licensed taxis may use ride-hailing apps, the Ministry of Transport announced Friday. Such apps are hugely popular in China, and the ministry said it needed to protect users.<\/p>\n
The ruling could be a setback for Uber, which faces legal challenges in South Korea, India, Europe, California and other markets for using drivers who lack taxi licenses.<\/p>\n
“While we encourage innovation, we prohibit private cars from using platforms to participate in the ‘hired car’ business,” said a ministry announcement. It said companies that operate ride-hailing apps will be required to make sure no unlicensed drivers use them.<\/p>\n
China’s ride-hailing market is dominated by domestic competitors Didi Dache, backed by Internet giant Tencent, and Kuaidi Dache, backed by rival Alibaba Group. Those services are used mostly by taxi companies.<\/p>\n
A third Chinese Internet giant, search engine operator Baidu Inc., jumped into the market in December by investing in Uber.<\/p>\n
Taxi companies in the United States, Europe and other countries have complained Uber and similar ride-hailing services have an unfair advantage because they are not covered by regulations that affect the established industry.<\/p>\n
In December, the Shanghai city government detained and fined 12 unlicensed drivers who received business through the Didi Dache app.<\/p>\n
In South Korea, the chief executive of Uber’s local subsidiary was charged in December with operating an unlicensed transport company.<\/p>\n
Police in New Delhi say they are considering similar charges. A French court has ordered Uber to remove from its app any language suggesting it was legal for its drivers to act like taxis.<\/p>\n
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