Apple Wants 30% of Tips From Chinese Chat Apps
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.
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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.
It sounds kind of like Apple asking for a cut of every PayPal transaction that’s initiated through an app. That really doesn’t make much sense.
The promise of in-app purchase was that it was supposed to make purchases uniformly easy for the customer. Instead, Apple’s insistence on 30% is degrading the user experience (e.g. Kindle) and encouraging developers to complicate their apps to route around the fee. And if Tencent doesn’t back down—and I don’t see why they would—this could really hurt iOS in China. Hopefully this spat will trigger a rethinking of Apple’s policies.
Previously: Apple’s China Problem: WeChat.
Update (2017-05-19): See also: Ben Thompson, John Bergmayer.
Update (2017-07-20): Emma Lee:
Apple is planning to remove its controversial App Store policy of taking a 30 percent cut on tipping from users to content creators in China, local media The Paper is reporting (in Chinese), citing several sources they identified as execs at Chinese internet firms. Several game developers also got wind of Apple’s plan to change its tipping policies, the report noted.
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"The promise of in-app purchase was that it was supposed to make purchases uniformly easy for the customer. Instead, Apple’s insistence on 30% is degrading the user experience (e.g. Kindle) and encouraging developers to complicate their apps to route around the fee. And if Tencent doesn’t back down—and I don’t see why they would—this could really hurt iOS in China. Hopefully this spat will trigger a rethinking of Apple’s policies."
Well, I don't think Apple gives a goddamn about degrading the UX if they can keep growing "beyond the box" revenue.
But, yeah, Apple's weakness in China is the one thing I can imagine giving them pause on really pushing this.
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Also, I mentioned this on the relevant thread, but am I the only one who thinks Amazon Video coming to the Apple TV in a deal which will almost definitely involve Apple giving up their cut on rental/purchase of video is a really big deal?
It seems to me that this will set a precedent that will play out in very unpredictable ways, among other big companies, public relations, and even legal issues...
@Chucky Yes, it’s all connected. Amazon Video and WeChat are like dominoes. The way Apple handles its cut for those two will affect the entire app ecosystem and, as you say, potentially other companies and industries.
This spat between Tencent and Apple coincides with Tencent trying to build paid content subscription into WeChat. Apple would naturally take a 30% cut as it does from any other publishers that benefit from IAP.
And rumour has it that Tencent wasn't cool with that (neither were many publishers). Thus Apple sort of doubled down on its policy, either out of discontent or as a precaution to Tencent — if Apple were to shut down paid subscription after WeChat launching it with a lot of launch event shenanigans it would look bad for both parties.
Update: WeChat is eating Apple's cake. Case in point: Xiaomiquan (literally secret cliques) lets anyone create group chat with a paid entry fee, either one-time upfront or subscribed.
Typically this is when Apple IAP kicks in. However, Xiaomiquan utilizes Wechat's payment and authentication system for the feature, bypassing that 30% tax.
I still stand by my speculation that Apple wanted to pose a gesture that this had to stop.
<-- it's a link to a paid group chat.
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So presumably, at least in some cases (e.g. YouTube), the chat app takes a cut, the payment processor takes a cut, and now Apple wants a cut, too. So in the end, the person receiving the tip is left with a fraction of what was originally sent. Sounds like a great system.