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text丨you yunting (senior partner of shanghai dabang law firm, intellectual property lawyer)

according to media reports, apple has recently stepped up pressure on chinese technology giants such as tencent and bytedance, demanding that they stop the practice of in-app creators circumventing apple's 30% commission (commonly known as the "apple tax"). tencent also admitted that it is negotiating with apple on the issue of revenue sharing for wechat mini-games. in fact, the high apple tax is inseparable from apple's closed system and its strong business model of integrating software and hardware. if negotiations fail, the antitrust law will be a good solution. in fact, the cause of this dispute is also the antitrust law. today, i will share with you my personal opinion.

1. google’s defeat in the antitrust case was the trigger for the apple tax conflict

apple's increased pressure on chinese technology giants is likely to be a butterfly effect caused by google's "antitrust". google and apple once signed a default search engine agreement. apple set google as the default search engine for apple devices, and google would share a high proportion of search engine advertising fees with apple. however, in august 2024, the u.s. district court for the district of columbia ruled that google's exchange of search advertising revenue for default search engine status was to maintain its monopoly position, constituted a market blockade, and violated the u.s. antitrust law, the sherman act.

losing so much revenue will definitely put pressure on apple's performance as a listed company, and the management must find ways to increase revenue and reduce expenditure. tencent's total revenue for mini games in the first half of 2024 was 16.6 billion yuan, of which the proportion of ios should not be low. if these revenues are divided according to the apple tax rules, apple can get billions, which can more or less make up for the loss of google's revenue. therefore, this apple tax dispute is likely directly related to google's antitrust defeat.

2. the u.s. department of justice’s antitrust complaint proves that apple favors wechat

this time apple wants to collect apple tax from tencent's mini-games. most domestic media support tencent, but it is fair to say that in just tolerating the existence of wechat mini-games, apple actually gives tencent more freedom than developers in other countries and regions around the world, including american developers. this can be proved by the indictment filed by the us department of justice against apple for suspected illegal monopoly this year. the indictment stated that super apps have significant market potential due to their one-stop services and cross-platform capabilities, but under apple's monopoly control, the development of super apps in the united states has been seriously hindered. but in china, wechat, a super app, has risen, and apple's preferential treatment is indispensable.

wechat did not have mini-programs and mini-games in its early days. tencent added mini-programs to wechat in 2017 and mini-games to wechat at the end of the year. mini-programs and mini-games have made wechat a cross-platform super app that allows users to access similar functions and content on different devices. wechat’s addition of these functions must be approved by apple. today’s wechat has a very good ecosystem, whether it is mini-programs or mini-games. apple has not imposed too many restrictions on wechat on ios, such as imposing many restrictions when wechat updates, or setting incompatibility in the ecosystem as a necessary condition.

therefore, from apple's perspective, super apps are a fundamental and disruptive challenge to apple's existing app distribution and development model, and may weaken apple's control over the app ecosystem. elsewhere in the world, especially in apple's home base, the united states, apple would certainly not tolerate the emergence of such apps. in the case in which the us government sued apple for alleged monopoly this year, the complaint clearly stated that apple prevented the emergence and development of super apps in the united states by controlling the distribution and creation of applications and implementing a series of restrictions. specifically:

rather than respond through fair competition, apple uses its control over app distribution and creation to effectively prohibit developers from offering super apps. apple develops, strategically expands, and aggressively enforces its app store guidelines to effectively block hosted mini-programs within apps.

since 2017, apple has arbitrarily imposed exclusivity requirements and unreasonably restricted mini programs and super apps. for example, it requires u.s. apps to display mini programs in a plain text list, prohibits the use of icons or tiles to display mini programs, and prohibits the classification of mini programs (mini programs in wechat have icons).

apple selectively enforces contract rules on developers to prevent them from making money through mini-programs. apple blocks mini-programs from accessing the apis needed to implement apple’s in-app purchase (iap) system, even if the developer is willing to pay apple’s monopoly tax. similarly, apple blocks developers from using other in-app purchase methods other than iap. this harms the interests of both users and developers. (ios wechat’s mini-games generate billions of yuan in revenue each year, but they don’t pay apple taxes. is this considered preferential treatment?)

how did wechat bypass apple's restrictions? a report on 36kr clearly states: when a wechat mini-game player tops up, the system will direct the user to a "customer service chat" interface. after the user sends a top-up instruction to the customer service, the customer service returns a payment link, and the user can then complete the top-up through wechat pay. the author's experience is that apple's supervision of circumventing the system's charging is very strict. if other companies adopt this method, the application will definitely be removed from the app store by apple.

3. chinese consumers sued apple for monopoly, apple won but still worried

2021in 2017, consumers sued apple for illegal monopoly in the shanghai intellectual property court over apple tax, requesting that apple be ordered to immediately stop abusing its dominant market position, including but not limited to stopping the unfairly high price of charging 30% commission on the transaction amount through in-app purchases (iap); stopping the forced bundling, limiting transactions, and refusing transactions by requiring in-app purchases to be paid only through the iap system. in may 2024, the court made a first-instance judgment, dismissing all the consumer's claims.

however, the court also determined that apple has a 100% market share in the smart terminal application trading platform under the i0s system and has a dominant market position. so apple won the case on the surface, but if it is sued by developers later, it will easily be convicted of abusing its dominant market position. both consumers and apple appealed the case, and the case is currently under trial at the second instance. the following is an introduction to the first instance judgment of the case:

relevant market definition:the relevant geographic market in this case should be defined as the areas of the people's republic of china excluding hong kong, macao and taiwan. the relevant commodity market should be defined as the smart terminal application trading platform under the i0s system.

market dominance:apple inc. is the main operator of the smart terminal application trading platform under the i0s system in the people's republic of china except hong kong, macao and taiwan. although apple international distribution company also participates in the platform and consumer services, apple inc. and apple international distribution company are affiliated companies. other operators cannot enter the platform, so apple inc. obviously has a dominant market position in this market.

do consumers have the right to sue:consumers’ interests may be indirectly harmed by the unfair high-price behavior of the platform and they may become the ultimate bearers of monopoly profits. therefore, as a consumer, the plaintiff may suffer losses from the alleged unfair high-price behavior and has the right to file a lawsuit against the behavior.

does the apple tax constitute an unfairly high price?the court found that apple's app store charges a 30% commission, but charges a 15% commission to small businesses with annual revenues of less than $1 million; huawei's app store charges a maximum commission of 50%; tencent charges a maximum commission of 40%; xiaomi charges a maximum commission of 50%; and 0ppo charges a maximum commission of 50%. in addition, huawei, xiaomi and 0ppo also charge a 5% channel fee, which means the maximum commission is 55%.

therefore, the court determined that: 1. the lowest commission rate charged by most android app stores is higher than apple's 15%. 2. the highest commission rate charged by some android app stores is 55%, higher than apple's 30%. therefore, the commission charged by apple's app store is not significantly higher than the price of the same or comparable products of other similar business operators under the same or similar market conditions.

the author believes that the core reason why consumers lost the case is indirect benefits. apple tax is charged to app developers rather than consumers. therefore, if apple's behavior is to be found to constitute an abuse of its dominant market position, it is necessary to provide evidence of the damage. although apple tax will ultimately be borne by consumers, consumers only have indirect benefits, so the evidence in this regard will be relatively weak.

however, since the first-instance judgment determined that apple has a dominant market position, if the judgment is upheld in the second instance, it will have a huge impact on apple's subsequent app store management measures. because according to the anti-monopoly law, operators with a dominant market position have a very high anti-monopoly duty of care. if apple is subsequently sued by an app developer that has a direct interest in apple tax, it will be very troublesome.

4. eu fines against apple

in fact, the antitrust fine for apple tax in the eu was caused by complaints from app developers. in march 2024, apple was fined 1.8 billion euros in the eu because of complaints from music app developer spotify that apple tax was suspected of abusing its market dominance. spotify complained to eu regulators as early as 2020 and filed a lawsuit at the same time, accusing apple of damaging consumer choice and stifling innovation by extracting a 30% commission from apple app store subscriptions.

its ceo said that the apple tax seems to be aimed at harming streaming services that compete with apple. "pay the apple tax, otherwise your product will be taxed." but if spotify pays the apple tax, it will have to artificially raise the price of its service, which will be much higher than the price of apple's own apple music service. but if spotify does not pay, apple will implement a series of technical and experience restrictions to make the service experience of the spotify app worse (here you can see apple's favor to tencent).

in this case, the regulator found that apple prohibited music streaming app developers from fully informing ios users of alternative and cheaper music subscription services outside the app, and also prohibited them from providing any instructions on how to subscribe to such services. this is illegal under eu antitrust rules. therefore, the european commission fined apple more than 1.8 billion euros.

of course, apple is not convinced by this, and its statement said: there is no evidence that consumers are harmed: european consumers have more choices than ever in the exponentially growing digital music market. in just eight years, its subscribers have grown from 25 million to nearly 160 million, with more than 300 million active listeners, making spotify the biggest winner. there is no evidence of anti-competitive behavior: eight years of investigation have never produced a viable theory to explain how apple is hindering competition in an obviously booming market. so apple has sued the court to overturn the ruling.

finally, whether the apple tax is too high is actually a complex global issue. it not only involves the distribution of economic benefits between apple and developers, but also touches on multiple levels such as market competition, consumer rights and legal supervision. the author has a complex feeling about the apple tax. on the one hand, although the maximum commission of 30% in the apple app store in china is at a higher level than other countries and regions in the world, it is not too high compared with the maximum commission of 55% in the domestic android store. on the other hand, although apple has put pressure on tencent and required small game developers to pay the apple tax, apple has also given wechat a lot of room to develop in the ios ecosystem, and the development environment is even more relaxed than that of apple in the united states.

but in any case, the opening and price reduction of closed systems are always the trend of development. i still hope that domestic developers can use the game of antitrust law to force apple to reduce apple taxes, open third-party app stores, open app sideloading (that is, not downloading directly through the app store), and allow developers to notify consumers of lower-cost channels. let domestic consumers also enjoy the latest antitrust game results of the eu and the united states.

(this article was first published in jiemian news. the article only represents the author's views. editor's email: [email protected].)