Brief: Apple and WeChat battled over in-app purchases

Photo credit: Tech in Asia.

The news:

• Several Chinese social media companies, including WeChat owner Tencent, have lambasted Apple’s claim that user-to-user “tips” count as in-app purchases, of which Apple takes a 30 percent cut. “Tipping” functions common to several Chinese platforms let users send small amounts of money to each other.
• Tencent announced last month that it “regrettably” had to abolish WeChat’s tipping feature to ensure compliance with Apple’s new terms.
• Several Chinese senior executives say that Apple threatened to halt updates to their apps or even kick them out of the App Store if they refused to comply.

Why it matters:

• Apple is increasingly embattled in China as its share of the local smartphone market diminishes and it faces a variety of potential regulatory and intellectual property issues. Its 2016 China sales figures of US$46.5 billion represented a year-on-year drop of almost 24 percent.
• Nevertheless, China became the biggest market for the App Store last year, surpassing the United States in revenue. The US company will need to tread carefully to avoid causing a major upset among China’s mobile users and regulatory authorities, while also ensuring it can capitalize on the App Store’s local strength.

Source: The Wall Street Journal