Apple's Beats brand in April unveiled the Powerbeats Pro, a redesigned wire-free version of its popular fitness-oriented Powerbeats earbuds.
Apple Takes Risk By Telling Chinese Chat Apps to Disable 'Tip' Functions
Apple has told several Chinese social networking apps to disable their "tip" functions to comply with App Store rules, according to executives at WeChat and other companies.
The tip functions in Chinese messaging platforms are free to use and allow people to send authors and other content creators monetary tips through transfers to mobile wallet accounts. However, according to The Wall Street Journal, Apple has decided that tips are equivalent to in-app purchases – similar to buying games, music, and videos – therefore Apple is entitled to a 30 percent cut of every transaction.
WeChat on iPhone
The move by Apple appears to be a way to eke out additional revenue from Chinese iPhone users as part of a broader effort to increase its market share in the country. According to research firm IDC, Apple's market share in China dropped from 16 percent in Q1 2015 to 9 percent in Q1 2017, while the iPhone has fallen to fourth place behind Chinese brands Oppo, Huawei, and Vivo.
On the other hand, Apple's App Store revenue in China overtook its U.S. App Store revenue in 2016 and became the biggest App Store market in the world. Making the tip function an in-app purchase in China's wildly popular chat apps would seem to be a sure-fire way to increase Apple's revenue. However, Apple's pressure on messaging platforms like WeChat is a risk and threatens to alienate huge Chinese companies.
Some social-networking apps have likened Apple's tactic to arm-twisting, according to The Wall Street Journal. Apple is said to have told chief executives at two companies that if they refuse to make the change, updated versions of their apps won't be made available and they could be kicked out of the App Store. "We don't charge anything as the platform, but Apple gets 30 percent for doing nothing," one of the executives reportedly fumed.
The annoyance stems from the way the tipping culture is viewed in China. Chinese app developers see tipping as fundamentally different from in-app purchases because users only tip voluntarily as a mark of appreciation when they consume content. But the biggest worry for Apple could be whether the Chinese government decides to intervene and side with the tippers.
WeChat is in talks with Apple to try to find a new solution to the tipping problem and come to an alternative agreement, according to people familiar with the matter.
The tip functions in Chinese messaging platforms are free to use and allow people to send authors and other content creators monetary tips through transfers to mobile wallet accounts. However, according to The Wall Street Journal, Apple has decided that tips are equivalent to in-app purchases – similar to buying games, music, and videos – therefore Apple is entitled to a 30 percent cut of every transaction.
The move by Apple appears to be a way to eke out additional revenue from Chinese iPhone users as part of a broader effort to increase its market share in the country. According to research firm IDC, Apple's market share in China dropped from 16 percent in Q1 2015 to 9 percent in Q1 2017, while the iPhone has fallen to fourth place behind Chinese brands Oppo, Huawei, and Vivo.
On the other hand, Apple's App Store revenue in China overtook its U.S. App Store revenue in 2016 and became the biggest App Store market in the world. Making the tip function an in-app purchase in China's wildly popular chat apps would seem to be a sure-fire way to increase Apple's revenue. However, Apple's pressure on messaging platforms like WeChat is a risk and threatens to alienate huge Chinese companies.
Some social-networking apps have likened Apple's tactic to arm-twisting, according to The Wall Street Journal. Apple is said to have told chief executives at two companies that if they refuse to make the change, updated versions of their apps won't be made available and they could be kicked out of the App Store. "We don't charge anything as the platform, but Apple gets 30 percent for doing nothing," one of the executives reportedly fumed.
The annoyance stems from the way the tipping culture is viewed in China. Chinese app developers see tipping as fundamentally different from in-app purchases because users only tip voluntarily as a mark of appreciation when they consume content. But the biggest worry for Apple could be whether the Chinese government decides to intervene and side with the tippers.
One executive says his company is talking to the Ministry of Industry and Information Technology, a regulator, about whether Apple is imposing unfair rules by turning tipping into in-app purchases. MIIT says it isn’t involved. The People’s Bank of China, which regulates electronic payments, didn’t respond to a request for comment.Apple has suffered at the hands of Chinese state regulators before. But Apple also risks frustrating China's biggest company Tencent Holdings Ltd, the developer of WeChat, which has 938 million active monthly users. The messaging service works almost like an operating system all of its own, boasting multiple mini-apps that allow users to pay bills, book hotels, browse media, and more, without ever having to leave the chat platform. The nature of the system itself could be a threat to Apple's app revenue, while WeChat is arguably more important to Chinese smartphone users than any individual phone brand – iPhone included.
WeChat is in talks with Apple to try to find a new solution to the tipping problem and come to an alternative agreement, according to people familiar with the matter.
[ 228 comments ]
Top Rated Comments
(View all)
28 months ago
This could turn out really badly for Apple is they go through with it. It might be just posturing but they aren't going to be viewed favourably in the eyes of the Chinese consumers with this move. User-to-user money transfer isn't in-app purchase and shouldn't be charged a cent by Apple. It's just that simple.
28 months ago
What about apps like PayPal or Venmo? When I tell Venmo or PayPal to take $50 out of my bank account, and then transfer it to my buddy for pizza or to a seller on ebay, isn't that akin to an IAP too in the same way these tips are?
I think Apple needs to find a clearer line to draw, instead of doing this on an unpredictable case by case basis. Even if that line means a few more transactions occur without Apple getting a cut, so be it. Clarity and predictability should be top priorities for the ecosystem.
I think Apple needs to find a clearer line to draw, instead of doing this on an unpredictable case by case basis. Even if that line means a few more transactions occur without Apple getting a cut, so be it. Clarity and predictability should be top priorities for the ecosystem.
28 months ago
I really hope that Apple gets a smack on their greedy wrists for trying to exploit a facet of Chinese culture and turn it into a revenue stream. I am sure they will as the China doesn't seem to take their corporate bullying as readily as US and EU.
28 months ago
Not sure how that is increasing market share by increasing prices and decreasing features. Thats not usually how it works.
28 months ago
What's next, taking 30 percent from money transfers in bank apps?
Where does the greed end?
Where does the greed end?
28 months ago
China is a heavily protectionist market to begin with. Apple probably has very little to lose in the long run by doing this.
Very little to lose?o_O What happens to Apple's revenue and profit if this leads to a ban in the Chinese market? China is their largest market. Very little to lose.:rolleyes:
28 months ago
Wechat has more users than iPhone... and it dominates 1 of Apple's most important markets. It was really un-wise choice for Apple to choose fight instead of cooperate. Plus that this move looked ridiculous for Apple, it's not reasonable. As a huge Apple fan, and a previous Tencent hater (well, years ago, not really now), I'm with Wechat & Tencent this time.
28 months ago
When asked about why Apple would do this to Wechat, Phil Schiller replied "Courage".
28 months ago
Why would Apple do this when their market share is already taking a hit in China..
[ Read All Comments ]
An escalating trade war between Japan and South Korea could make Chinese manufacturer BOE Technology a "strong contender" for OLED display orders from Apple, according to industry sources who...
iPhone loyalty has hit its lowest level since 2011 and Samsung has been the main benefactor, claims a new survey conducted by trade-in service BankMyCell.
The survey, cited by CNET, tracked...
Sky: Children of the Light, by Journey developer thatgamecompany, is now available for iPhone, iPad, and iPod touch. Its release follows last year's launch of the beta version of the game, titled...
Plex today announced a few updates for its Apple TV and iOS apps, adding notable new features that are worth highlighting.
The Apple TV app now supports HDR video playback, and Plex Pass...
The newest version of Spotify for iOS, released yesterday, quietly added support for Apple's multitasking Slide Over and Split View feature on the iPad.
As noted on Reddit and highlighted by...
Apple today seeded the fourth beta of watchOS 6, the software that runs on the Apple Watch. The new beta comes two weeks after the third beta and more than a month after Apple first unveiled the new...
Apple today seeded fourth beta of an upcoming tvOS 13 update to developers, two weeks after seeding the third beta and more than a month after unveiling the tvOS 13 software at the Worldwide...
Belkin today announced the launch of three new wireless chargers in its BOOST lineup, all of which will be available from Apple's online store and select Apple retail locations.
All of the...
