Apple quietly drops practice of taking a cut on digital tipping after pressure in China

Analysts said the US company’s 30 per cent take had angered users in China where digital tipping is widespread, and had led to a dispute with internet giant Tencent

PUBLISHED : Monday, 18 September, 2017, 6:02pm
UPDATED : Monday, 18 September, 2017, 10:09pm

Apple will now allow users of its devices in China to send digital monetary tips to each other free of charge in a quiet reversal of its previous practice of taking a cut of the transaction, which had provoked outrage from internet content creators and led to a row with Chinese internet giant Tencent.

According to a recent update to the app store guidelines, Apple will allow users to send tips without going through the in-app purchases function, as long as the tips go fully to the receiver. The company takes a 30 per cent cut of all transactions that go via in-app purchases.

But the new policy will still require users to go through in-app purchases if they want to deposit currencies into an app first and use them to tip later – a common practice in popular live-streaming apps where broadcasters and performers have to share the tips with app developers.

Apple did not immediately reply to a request for comment.

“The new policy has come faster than I expected,” said Kitty Fok, managing director of IDC China, who believes Apple should further liberate purchase rules to benefit more app developers, as they are very important platforms to help push iPhone sales in China.

“It may affect their iTunes revenue, but it is more important to get a friendly partnership with Tencent,” she said.

Tencent had taken umbrage at Apple’s 30 per cent rule, and in April disabled the tipping function in its WeChat messaging service app for iPhones. The function has only been available to WeChat accounts on Google’s Android platform since then.

Popular Chinese online news aggregators Toutiao and UC news have also taken down the tipping functions on the iPhone apps.

Tencent did not reply to a query on whether it would bring back the tipping function for iPhone users.

Apple’s change of heart may have come as its relations with Tencent warm up again. A number of Tencent’s top executives, including founder and CEO Pony Ma and president Martin Lau, have reportedly visited Apple’s US headquarters recently.

WeChat had 963 million monthly active users as of the end of June, and from late August Apple had started accepting WeChat Pay as a payment method in the app store and on iTunes.

Apple has accepted Tencent arch rival Alibaba’s Alipay service as a mobile payment option for over 10 months.