Feckless Apple shakes down the Chinese just like they do Americans. They will no doubt find out soon enough that the Chinese government won’t be as easy to buy-off as California’s.
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, 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.
While the sums are small, the stakes for Apple are big. The company is at a critical juncture in China. Its revenue is sliding. Its market share dropped from 16% in 2015’s first quarter to 9% two years later, according to research firm IDC, and the iPhone has fallen to No. 4 in the market behind three homegrown brands.
Meanwhile, China became the biggest market for Apple’s App Store, surpassing the U.S. in revenue in 2016. In the fourth quarter of 2016, Chinese paid $2 billion for in-app purchases—the most money drawn from any country in App Store history, according to mobile analytics company App Annie Ltd.
So, 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.
Source: Wall Street Journal