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Apple and Chinese Apps are In Dispute Over In-App Purchase Fees - Who Will Win?
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Apple and Chinese Apps are In Dispute Over In-App Purchase Fees - Who Will Win?

Han Honggang
36Kr, 2017
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Recommendation

When users buy something within an app on their iPhones, Apple takes a 30% cut. As far as Apple is concerned, there’s no way around it, but in China, developers have been using a variety of strategies to dodge the in-app purchase (IAP) charge. While the fees are profitable for Apple, they interfere with some popular features within China’s most used apps and are getting Apple bad press. What’s more, Apple’s actions are beginning to draw regulators’ attention. This article by 36Kr contributor Han Honggang offers a glimpse of Apple’s gains and losses in its tug of war with Chinese tech companies. getAbstract recommends it to cross-cultural consultants, tech executives and marketing strategists who want to understand the hidden challenges of catering to the Chinese market.

Summary

When users buy something within an app on their iPhones, Apple takes a 30% cut. This in-app purchase (IAP) fee allows Apple to profit from the growing subscription revenue of media and broadcasting apps, such as WeChat and Zhihu and various live-streaming platforms. Since part of that revenue comes in the form of gratuities and virtual gifts for content producers – a Chinese custom – Apple updated its developer guidelines so that tips and gifts are now also subject to Apple’s fee. With iPhone sales and paid-app revenue decreasing in China, Apple depends on its IAP charges to ensure a steady source of long-term income. In China, the total revenue for articles, talks and live streams amount to more than ¥1 billion [$150 million]. The IAP fee brings...

About the Author

Han Honggang is a reporter of 36Kr, an independent news media platform for business and technology analyses in China.

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