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Given Apple's huge size, it is unrealistic to rely on one or several giants to force Apple to "reduce taxes".

The full text is 2126 words and takes about 6 minutes to read.

Written by Xin Haiguang (columnist) Edited by Chi Daohua Proofread by Zhang Yanjun

▲Data map of Apple's retail stores. Photo/Xinhua News Agency

Apple users may not be able to update and upgrade WeChat and TikTok?

According to Phoenix.com, Apple is increasing pressure on Tencent and ByteDance, demanding that they make fundamental changes to WeChat and TikTok, otherwise it will refuse to provide update services.

People familiar with the matter said that in recent months, Apple has been asking the two companies to plug a loophole in the WeChat and TikTok apps that could be exploited by in-app creators to direct users to external payment systems, thereby circumventing the 30% commission that Apple typically charges.

In fact, this is not the first time that Apple has put pressure on domestic technology giants over the commission issue. In May this year, Apple warned Tencent that it might reject necessary updates to WeChat unless Tencent removed the links used by mini-game developers to accept payments outside the Apple platform.

It is not clear whether Tencent and ByteDance will compromise with Apple, but even if they finally compromise this time, similar conflicts between Apple and its developers will not end. This is because this is an important move for Apple to defend its core interests of the "Apple tax", and there is not much room for compromise.

So, is Apple taking a risk by competing so hard with the two super apps WeChat and TikTok?

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There has always been controversy surrounding the "Apple tax"

The so-called "Apple tax" refers to the 30% commission that Apple takes from paid apps in its App Store. According to Apple's guidelines, all sales of digital goods must go through its system, and its review team may reject application updates that violate this policy.

In the general impression, Apple is a hardware company, but in fact, a large part of its revenue comes from services. Consumers have to spend money to buy an Apple phone, and they have to spend money after entering the Apple ecosystem. For example, buying cloud storage space, music, game subscription services, etc., are fees paid directly to Apple.

In addition, there is the so-called "Apple tax". Consumers pay App developers in the Apple ecosystem, and 30% of the fees are indirectly paid to Apple as commissions. For example, if a consumer buys game points in the King of Glory app on an Apple phone, Apple will share the revenue; if a consumer tops up and rewards his favorite anchor on Douyin or Kuaishou, and uses Apple's payment channel, he will also share the revenue.

Compared with various markets around the world, China's "Apple tax" is relatively high, with the United States only being 27%.

There has always been controversy over the level of the "Apple tax". For many small developers, it may be difficult to charge for an app they develop in an open system like Android, but in the Apple system IOS ecosystem, they often have good income. For them, a 30% commission is not much. In 2020, Apple will also reduce the commission rate for small developers to 15%.

But for other developers with relatively stable revenue scale, it is another situation. These developers already have a mature user base and stable income, but they are "making money without doing anything" by Apple just because they have settled in the iOS system, which naturally makes them feel unbalanced. So they will think of taking various measures to avoid Apple's payment channels in order to bypass the "Apple tax".

Other companies have tried to prohibit Apple and other app stores from forcing software developers to use their payment systems through lawsuits, and conflicts have occurred from time to time.

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Going it alone is not a good idea

From a legal perspective, the "Apple tax" is not at a disadvantage in terms of rationality, because Apple does have the right to be compensated based on intellectual property rights. Moreover, its 30% commission is not higher than the distribution cost of about 40%-50% of CDs sold through traditional channels.

In a horizontal comparison, the commission rate for game sales on Sony's PlayStation platform and the commission rate for developers on Google's Google Play store are both 30%.

In China, some mobile phone manufacturers have formed a "hardcore alliance" to collect commissions through their own app stores, with the commission ratio even reaching over 50%. Just recently, Tencent "hard-lined" against domestic mobile phone manufacturers and took the initiative to remove some Android platform app stores, which became a hot topic.

The debate over right and wrong is bound to be protracted, but the real money is in the short term. Therefore, developers try to take various ways to bypass Apple's payment system to reduce the "Apple tax" expenditure. But if this practice is discovered and banned by Apple, at least for now, it will be difficult for developers to resist. After all, Apple owns the territory and has absolute dominance.

So, with Tencent and ByteDance having a user base of over 1 billion, can they confront Apple head-on, for example, by proactively removing products from the shelves to protest the "Apple tax"?

After all, for most users, they can live without an iPhone, but they cannot live without WeChat for a day. WeChat is more irreplaceable than Apple. If there is indeed an unavoidable pressure of "choosing one of the two", this kind of tragic "hard fight" may be worth trying. But in reality, this kind of "hard fight" is unlikely to happen.

First of all, there is no need. Even if they take 30%, they still have 70% of the revenue. If they withdraw, this revenue will become zero. What will Tencent gain by doing this? Freedom from Apple? Tencent does not have its own mobile phone ecosystem.

More importantly, the cost of such a "hard fight" will be extremely high, because it means forcing users to make a difficult choice between two options, and Tencent is not without competitors in the market, and the same is true for ByteDance.

As far as this incident is concerned, Apple put pressure on Tencent and ByteDance in order to get the two to help plug loopholes in their products that allow other developers to evade the "Apple tax". It is also difficult for Tencent and ByteDance to turn against Apple for the interests of third parties.

In other words, given Apple's huge size, it is not realistic to rely on one or several giants to "hard-line" force Apple to "lower taxes". The best way is to form a united front, from domestic to international, from industry, market to legal and regulatory departments, to reach a consensus on the reasonable commission burden that Internet developers should bear, and on this basis urge or force Apple to uniformly reduce the "Apple tax". If the collection of the "Apple tax" is ultimately proven to be due to its market monopoly, Apple should also pay the corresponding price for it.

DutyLi Jiajian Guli

Part of this article was first published on Beijing News’ official account “Beijing News Commentary”

Without the written authorization of Beijing NewsNo reproduction or use allowed

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