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securities times reporter guo bohao

with the new iphone product launch imminent, the game between domestic digital technology companies and apple inc. (hereinafter referred to as "apple") over commissions has once again attracted market attention. recently, rumors that "iphone 16 may not support wechat, and once the iphone is upgraded to ios18.2, wechat will not be available" have continued to ferment on social media. on the afternoon of september 6, with the wechat ios system ushering in an update, the false speculation of "choose one between apple and wechat" has collapsed.

the reporter noticed that the root of the dispute between the two companies lies in the fact that apple believes that new businesses such as mini-program games (hereinafter referred to as "mini-games") may direct users to third-party payment systems, thereby bypassing the in-app payment channels of the apple app store (app store) and evading the "apple tax."

in the view of the experts interviewed, the relatively higher "apple tax" not only increases the cost pressure of domestic digital technology companies and application developers, but also puts relevant entities at a disadvantage in international competition. we can learn from the experience of the european union, the united states, japan and south korea, and encourage apple to make corresponding changes by strengthening supervision and actively promoting legislation.

mini game "apple tax"

intense game

the game between digital technology companies and apple has been going on for a long time. whether in the domestic or international markets, the "apple tax" has imposed a considerable burden on companies and app developers. the domestic market is even more burdened by the 30% "apple tax" that is the highest in the world.

in the current ios ecosystem, in-app purchases of mini-games within apps such as wechat and tiktok are not connected to the app store's in-app payment channels, allowing the revenue from mini-games to bypass the "apple tax."

in recent years, the scale of emerging digital industries represented by mini-games and short dramas has expanded rapidly. the "china game industry report from january to june 2024" released by the china audio-video and digital publishing association shows that the revenue of mini-games in the first half of this year reached 16.6 billion yuan, a year-on-year increase of 60.5%, which has caused this "loophole" to attract apple's attention. if apple imposes a 30% "apple tax" on mini-games this time, it will directly affect the revenue of application developers. according to public data, wechat mini-games alone will serve more than 400,000 developers in 2023, and more than 240 games have a quarterly turnover of more than 10 million yuan.

ouyang rihui, deputy director of the china internet economy research institute of the central university of finance and economics, pointed out in an interview with a securities times reporter that for applications in the app store, apple provides a variety of support such as operating frameworks, payment services, technical interfaces, and app store recommended traffic. however, the operating environment of small games and short dramas is within wechat and douyin. the technical frameworks, security capabilities, and operating services required by developers on a daily basis are all provided by wechat and douyin. they do not enjoy various support and capabilities from apple. for such applications, apple's commission is not reasonable.

some experts warned that if all parties fail to reach an agreement on the "apple tax" for small games, it will cause huge losses to apple, domestic digital technology companies, and the majority of application developers. hong yong, an expert from the think tank of the china digital reality integration 50 forum, told reporters that the negotiation should uphold the tone of win-win cooperation and protect the rights and interests of the majority of developers.

many countries have loosened their "apple taxes"

in the past few years, many countries and regions around the world have launched antitrust investigations or lawsuits against apple and strengthened legislation in related fields. apple has adjusted the "apple tax" in the eu, the united states, japan, south korea and other places accordingly, reducing it from 30% to 17%-27%, of which the eu standard tax rate is as low as 17%. at the same time, apple has opened up the side-loading market, third-party payment and external chain payment in some markets such as the eu, allowing users to purchase the applications they need to use and the digital content in the applications through channels other than the app store.

a report released by the third-party data statistics agency sensor tower shows that in 2023, the global revenue of "apple tax" will be approximately us$22.34 billion, equivalent to approximately rmb 160.8 billion, of which the chinese market contributed more than rmb 40 billion.

the high "apple tax" has brought considerable operating pressure to chinese digital technology companies. zhang chi (pseudonym), ceo of a network technology company in fuzhou, told reporters that if domestic software developers want to bypass the android hardware manufacturer's app store when launching a game, they can buy ads on platforms such as douyin. after users click on it, the app developer can direct the user to the official website to download, thereby avoiding the commission sharing with android hardware manufacturers. however, apple does not open the side-loading market in china. "even if you advertise on douyin, you have to jump to the app store to download the software. software developers need to pay the advertising fee for 'buying volume' and the 30% 'apple tax', which is a heavy burden."

many companies have tried to circumvent the "apple tax" through third-party payment, but most of their attempts have ended in failure. the reporter noted that in the second half of 2023, chinese game developer mihoyo tried to circumvent apple payment twice, but both attempts failed. other chinese developers such as lilith and dr. dingxiang have also made similar attempts, but the results were also poor.

hong yong said that the high "apple tax" has increased the operating burden of app developers and may limit their investment in r&d and innovation. at the same time, compared with countries where the "apple tax" has been lowered, chinese companies are under greater pressure to collect commissions, which is not conducive to chinese companies' participation in international competition.

how to deal with the domestic market

as an important sales market for apple products, domestic digital technology companies and a large number of application developers hope that apple will make changes - appropriately lower the commission rate, open up the side-loading market, third-party payment and external link payment.

according to data released by the operation monitoring and coordination bureau of the ministry of industry and information technology, according to statistics from the national app technology testing platform, by the end of june 2023, the number of domestic mobile application developers will be 830,000, of which 580,000 are apple developers. if apple can "reduce the burden" for these nearly 600,000 developers, the innovation and vitality of the domestic mobile ecosystem, especially the apple ecosystem, will be expected to increase, which is related to both the benefits of domestic developers and the benefits of apple's own ecosystem.

from a global perspective, the european union, the united states, japan and south korea have pushed for a reduction in the "apple tax" through litigation or legislation. among them, the digital markets act, which the european union launched at the end of 2023, has been particularly effective. the act proposes the concept of "gatekeepers". as one of the six gatekeepers, apple is explicitly required not to prevent consumers from connecting to companies outside the platform. if it violates the law, it will face a fine of up to 10% of its global annual turnover. under the influence of the digital markets act, apple has made a series of concessions in the european union.

"the practices of the european union, the united states, japan and south korea are worth learning from." zhong gang, director of the institute of competition law at east china university of political science and law, told reporters that administrative law enforcement agencies can initiate an antitrust investigation against apple in the antitrust field and actively promote relevant legislation to prompt apple to make corresponding changes.

zhong gang believes that taking relevant regulatory actions against apple is a reasonable behavior based on the anti-monopoly law of the people's republic of china and relevant platform governance rules, which will also help create a more fair and reasonable business environment.

in addition, "the consumer association has the nature of a social organization and can also represent consumers in contact with apple to fight for the reasonable rights of industry practitioners and individual consumers without exacerbating conflicts," ouyang rihui pointed out.