Apple to yield, abolish cut on tips: report

Updated 2017-07-20 09:13:23 Global Times

Move would follow practice of local competitors

Apple reportedly is considering abolishing its 30 percent cut on in-app tips in China, a move that experts said was meant to "localize" itself in the highly competitive market.

Tipping is a popular online practice in China where people give small donations, usually in the form of virtual currencies, to reward writers, developers and content creators.

Apple may allow individual users to tip another person without using the "in-app purchase" function in Apple's app store, which takes a 30 percent cut from every transaction, thepaper.cn reported on Tuesday, citing several senior executives in domestic Internet companies.

As of press time, Apple wouldn't confirm whether it would do so.

A Shanghai-based online live-streaming broadcaster said that if Apple deleted the tip cut function, it would be "good news" as it would increase her income. "I think Apple is under pressure to make that decision as other platforms don't take cuts from virtual currency tips," she told the Global Times on Wednesday.

Tang Xiaohan, a public relations representative of domestic live-streaming app Yingke, told the Global Times that Yingke has not heard from Apple about changing the tip cut rules, and therefore she had no comment.

She added that Yingke had always followed Apple's rules about tip cuts.

Despite developers like Yingke that chose to play by Apple's rules, there were also protests from domestic developers about Apple's tipping regulations.

Tencent Holdings, for example, chose to shut down the tipping feature on its popular social network platform WeChat in April, rather than let Apple take cuts from WeChat tips.

WeChat declined to comment on Apple's possible change of rules when contacted by the Global Times on Wednesday.

Zhu Dalin, an analyst with IT research firm Analysys International, said that Apple's apparent change of attitude toward in-app tips shows the company's efforts to "localize" in the Chinese market.

"Overseas developers have a stronger sense about paying percentages to platform providers than domestic ones, largely because the free Android mobile operating system, the biggest competitor of the Apple iOS in China, has instilled a way of thinking among domestic app developers that they should not 'pay a tax' to mobile operating platforms," Zhu told the Global Times on Wednesday.

According to Zhu, changing the tipping-cut rules is just one of the localization measures taken by Apple. "For example, Apple Pay in July launched a 50 percent discount campaign with banking bonus points in China. Apple would hardly do things like that in overseas markets, but here in China, it wants to do something that fits domestic consumers' shopping style," Zhu noted.

"All those efforts show that Apple yearns to adapt to the domestic market, which it considers very important," Zhu said. "The yearning is getting stronger as competition from domestic mobile phone brands like Xiaomi is rising."

On Wednesday, the tech behemoth named Isabel Ge Mahe as the vice president and managing director of Apple's greater China region, the Wall Street Journal reported. The move comes as the company faces a sliding share in the Chinese market. The Apple iOS market share in China dropped 9 percentage points year-on-year to 13.2 percent in the first quarter, compared with a sweeping 86.4 percent share for Android.

Thepaper.cn report also pointed out that Apple's change of mind might be because it was in some hot water amid accusations of monopoly practices, as China's regulators have received tip-offs and are scheduling meetings with the company about tip cuts.

Liu Dingding, an independent technology commentator, said that it makes sense for Apple to take cuts from transactions on its platforms, but still it is not strong enough to be a "mobile dictator" that people can't live without.

"At least in China, people can find replacements for Apple, but they can't find replacements for WeChat so far. So I don't think Apple would want to get into a complete deadlock with Tencent," he told the Global Times on Wednesday.

He also noted that abandoning tip cuts might hurt Apple's revenue to a certain extent, but its software income is "negligible" compared with its hardware revenues, money earned from selling mobile phones.

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