Apple’s Clash with Tencent in China
Updated: May 27, 2019
Apple has always carefully controlled who gets to make money from iOS. While China bans the use of plenty of Western apps, Apple has its own restrictions on China’s digital landscape, specifically WeChat. In 2017, as they try to turn around their declining sales in China, Apple has made moves that have fueled their developing digital battle with Tencent.
Apple came after WeChat for their ‘tipping’ feature, a mechanism that allows users to make online monetary donations to bloggers, broadcasters, and KOLs. Apple has had longstanding terms that give the company a 30% stake in all in-app digital purchases. These do not include tangible items from Starbucks, food delivery services, or online retail because these are not considered ‘digital items’. Yet they do include level-unlocks, subscriptions, premium services and, of course, tipping.
In April, due to Apple’s restrictions, WeChat was forced to remove the payment button which allowed users to tip. Although it was still possible to donate through QR codes, this has been proven to be a more cumbersome method. Zhou Chong, a writer about psychology and sexuality on her WeChat account, went from receiving about ¥1,000 a day to only ¥100 a day after the tipping button was removed. With this move, Apple has managed to take business away not just from Tencent, but also Chinese content creators.
WeChat Mini Programs are the platform’s apps within the app, except, unfortunately for WeChat, Apple won’t let them use the term ‘app’. Nevertheless, the functionality of Mini Programs is exactly the same. They are often extensions of existing companies and offer food delivery, taxi service, bike sharing, travel packages, news sources, the whole nine yards.
The introduction of Mini Programs is seen as an attempt from Tencent to form its own app-store. One would expect the people over at Apple to be shivering in their boots due to several reasons. Mini Programs’ instantaneous download, the fact that they don’t take up any additional space, and their presence entirely inside WeChat give them some obvious benefits over traditional apps.
However, Mini Programs have not been as much of a success as Tencent would have hoped. As shown below, the average number of times Mini Programs were visited by users plummeted in the weeks after their launch and are yet to recover.
A report from iiMedia suggests that users and developers are on the same page with less than 10 percent of developers said they would continue developing mini programs, and only 11.5 percent of users said they would continue using them. They would rather just continue using normal apps (I can hear Apple cheering from here).
The same report mentions that almost 70 percent of software developers aren’t even considering Mini Programs. Even the Mini Program Ads have since flopped due to their lack of significant back-end analytics in comparison to the versatility that Apple and Google products have.
Sure, WeChat has so far failed to create its own version of the app store, but Apple should still keep its head on a swivel. Check out the chart below.
Notice the drop in market share for the top 2 leaders due to the rapid growth of China’s big 3 smartphone manufacturers. It’s no wonder there are so many stories dooming Apple in China. WeChat is available on all other devices, each with their own app store based on the Android OS – that which Apple has no power over.
The iPhone is still the most popular smartphone in China, however, the number of collective Android users far exceeds iOS users, which means that Apple’s defensive measures can only affect a minority of Chinese netizens. If these recent growth trends continue, Tencent may soon have plenty of reasons to shrug off Apple’s aggressive moves, regardless of the failed Mini Programs.
Mailman is a digital sports marketing consultancy and technology company. We help global rights holders, athletes, and leagues to build a successful business in China.