Apple Inc. (NASDAQ:AAPL) is facing intense backlash in China as app developers react to a new App Store policy that recognizes ‘tips’ as in-app purchases. Under the new policy, all donations made inside popular social networks will now be eligible to a 70-30% revenue sharing agreement with the iPhone maker.
In-app Tipping
The tipping feature at the center of the fierce feud lets users send money to other people through the apps. Apple now insists that the features are in violation of its App Store Policy given that it does not get a piece of any amount transferred in this case.
The tech giant has already informed a host of Chinese app developers including WeChat that they will have to disable the ‘tip’ function if they don’t want to share any revenues. Chinese developers on the other hand insist that the feature is not part of Apple’s sharing revenue sharing model.
The developers also insist that the tipping feature keeps people using their apps and that they don’t actually generate any revenues from transfers. Apple is, however, maintaining a tough stance on the matter reiterating that it will have to make 30% from all the transfers on the tip functions. Those who do not comply with the policy according to the tech giant will face the possibility of their app updates not hitting the marketplace.
Apple Says China Fragile
Unlike in other markets, the in-app tipping function is more common in China which users use to display gratitude to writers, developers, and content creators. The only time that developers get to make money is when users tip them as a sign of appreciation which doesn’t occur all the time.
Apple threatening to block updates of apps that don’t share revenues from tips all but underscores its relationship with China that has become fragile in the recent past. However, the feud comes at a time when the Chinese smartphone market is the company’s fastest-growing software market. App revenues of $2 billion in the fourth quarter of last year all but means the company might have to play nicely if it is to sustain the growth.
Apple stock was unchanged in Friday trading session having soared by $0.52 to close the week at $153.06 a share.a
