Summary of Apple Is Charging High Fees. What Do Chinese Companies Do?

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Apple Is Charging High Fees. What Do Chinese Companies Do? summary
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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.

In this summary, you will learn

  • Why Apple’s 30% fee on in-app purchases is fueling discontent in China,
  • How Chinese tech companies try to dodge the fee and
  • How Apple might need to change tack in the future.
 

About the Author

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

 

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 in a pretty penny for Apple. Chinese tech companies complain online about the “bully-like tariff.” The fee and the inconvenience they incur undermine user experience and enthusiasm, and subscription-based producers feel they are being ripped off.

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