China's two largest taxi-hailing applications, backed by Alibaba Group and Tencent, have announced a merger that will help them cope with rising competition.

Hangzhou Kuaidi Technology Co, known as Kuaidi Dache, completed an alliance with Didi Dache, according to a joint statement e-mailed on Saturday, which didn't name the merged entity.

The deal will create China's biggest mobile platform for local transportation, the companies said. Regulators recently cracked down on car-hailing apps, including Uber Technologies of San Francisco, California. The Transportation Ministry banned private vehicles from acting as taxis last month, while also endorsing services that employ licensed vehicles and drivers, such as car-rental firms.