A Tip for Apple in China: Your Hunger for Revenue May Cost You

Li Yuan, writing for the WSJ: Apple's latest predicament centers on its App Store. Last month, Apple told several Chinese social-networking apps, including the wildly popular messaging platform WeChat, to disable their "tip" functions to comply with App Store rules (Editor's note: the link could be paywalled; alternative source), according to executives at WeChat and other companies. That function allows users to send authors and other content creators tips, from a few yuan to hundreds, via transfers from mobile-wallet accounts. Those transfers are offered by the social-networking apps free of charge, as a way to inspire user engagement. Now, those tips will be considered in-app purchases, just like buying games, music and videos, entitling Apple to a 30% cut. For Apple, which has been observing slowing growth in mature markets, China is increasingly becoming important. But the company's my way or high-way approach might hurt the company's image in China. And that image as well as fortunes of local companies, is what the Chinese authorities deeply care about. As Yuan adds, "while it's understandable that Apple wants to tap the App Store for more money, its pressure on the app platforms risks alienating powerful Chinese companies, turning off Chinese iPhone users and drawing unnecessary attention from the regulators." Executives of these IM messaging apps tell WSJ that Apple has threatened that it would kick their apps out of the App Store if they don't comply. The problem is, WeChat is way more popular in China than Apple -- or its iPhones or its services or both combined, analysts say. WeChat is insanely popular in China, and people love to use the app to pay for things they purchase and send money to friends. Apple's greed could end up resulting in millions of new Android users, analysts said.