A US tech firm is at loggerheads with Chinese tech firms, nothing new really. Apple risks losing it Chinese market due to its latest profit driven demands. Apple is attempting to monopolize in-app payments by forcing Tencent and ByteDance to use its system for WeChat and Douyin (TikTok). The tech giant is threatening to block app updates unless the companies agree to the directive that will see the US firm earn 30% commission.
Keep in mind that WeChat is crucial in China, enabbling socializing, payments, shopping, travel and more. Currently, the platform has 1 billion+ active users in the country. So, in the event the Chinese are forced to choose between Apple products and WeChat, Chinese users might just ditch their iPhones and iPads. Apple has to tread carefully as China accounts for almost 20 percent of it’s total sales annually.
At the end of May, a sales report indicates iPhone is already losing the chinese smartphone market share to a resurgent Huawei and other Chinese Phonemakers. It is now at 11%, hence, the US company might not want to antagonize the market further.
Apple has justified its actions, claiming that its guidelines mandate the use of its in-app purchase system for all digital goods and that apps not adhering to this policy face removal. The iPhone maker claims policies in its app ecosystem are to preserve quality and security.
Introduced about six years ago, WeChat claims over half a billion users play mini-games at least once a month. These bite-sized games, playable within the WeChat app, have gained popularity, bypassing traditional app store distribution.
WeChat and Apple Revenue Sharing Talks
Tencent has circumvented Apple’s in-app purchase system for its WeChat mini-games by directing users to external payment platforms. This strategy enables Tencent to retain a larger portion of revenue by avoiding Apple’s 30% commission. In addition, advertising revenue from mini-games now account for 15% of WeChat’s total income.
Tencent has confirmed it is in talks with Apple to establish a revenue-sharing model for WeChat mini-games.
“We want to make it available on terms that we think are economically sustainable, that are also fair. And so that’s a discussion that’s underway, and we hope that the discussion leads to a positive outcome,” Tencent’s Chief Strategy Officer James Mitchell said. “But in the event that discussion doesn’t progress, then the current status quo continues.”
