Apple has been ramping up pressure on ByteDance and Tencent to close loopholes in China that allow users to make in-app purchases outside Apple’s ecosystem, according to Bloomberg.
The tech giant is keen on maintaining its 30 percent commission on digital goods and services sold through its App Store. Reports indicate this campaign started in May when Apple allegedly warned Tencent that WeChat updates would be rejected unless the company eliminated external payment links used by mini-game developers. Tencent initially complied by issuing an update in July, but Apple went further, asking Tencent to disable in-game chat between creators and players to prevent potential external payment links. Tencent has yet to agree to this additional demand.
A similar approach was taken with ByteDance in June, with Apple threatening to block updates to Douyin (the Chinese version of TikTok) unless ByteDance closed similar payment loopholes. ByteDance has not formally responded to these demands. These aggressive moves by Apple are significant given China’s status as the world’s largest smartphone market, where Apple faces stiff competition and has recently experienced a decline in profits.
Apple’s insistence on strict adherence to its payment policies is part of a broader strategy to maintain its revenue from the App Store, which has faced scrutiny and legal challenges globally. The European Commission, for instance, has ruled that Apple must allow developers to direct users to external payment systems, while the company faces potential fines in the EU. In the US, Apple has been sued by Epic Games over its transaction fee policies, with Tencent holding a 40 percent stake in Epic.
China’s regulatory environment, however, has been somewhat more accommodating to Apple’s policies, although the country is moving towards reducing the dominance of closed ecosystems like the App Store. Despite the pressure, Apple remains optimistic about its long-term prospects in China. CEO Tim Cook expressed confidence during a recent earnings call, emphasizing the significant opportunities in the Chinese market.
The standoff between Apple and Tencent highlights a power struggle where both companies understand the critical role WeChat plays in China. WeChat’s extensive integration into daily life makes Apple’s threat to block updates less impactful than it might be for other apps. As negotiations continue, it remains uncertain how this conflict will be resolved.
(via Bloomberg)
