Apple Takes Risk By Telling Chinese Chat Apps to Disable 'Tip' Functions

[gnasher729]

This could turn out really badly for Apple is they go through with it. It might be just posturing but they aren't going to be viewed favourably in the eyes of the Chinese consumers with this move. User-to-user money transfer isn't in-app purchase and shouldn't be charged a cent by Apple. It's just that simple.

The AppStore rules are quite simple: On one hand, Apple takes their cut for anything that ends up on the user's phone. On the other hand, an app must not use in-app purchases and therefore Apple gets nothing for things that don't end up on your phone. So: Tipping the pizza delivery man is free. Tipping the author of an eBook that arrived on your phone for free must be done through in-app purchases.

 

[Defthand]

If Apple was providing the back end infrastructure to deliver the in-App content, and to enable the transaction, then it deserves compensation. But, clearly, this is not the case. Apple wants compensation for the fact that the activity is occurring on their hardware—which is bulls**t. Why is this a condition for iPhones and not for identical activities on the Mac?

Apple will argue that the WeChat app is free. That Apple allows it to compete with their own iMessage app, and delivers it using their App Store. Somehow, Apple wants to be compensated. That expectation might have been reasonable when the iPhone was exclusive. Now it’s a weak negotiating point. Arguably, Apple’s appeal is its hardware and OS legacy. But without third party apps, most people would get very little use from Apple’s products.

Personally, I resent that Apple requires me to acquire my apps from their store exclusively, especially since that same condition is not true with the Mac (yet). You can’t preach that you’re protecting your customer’s user experience when the same is possible on MacOS without the restrictions. This “walled garden”… is it to keep bad guys out… or is it to keep you walled in?

I think the solution is for WeChat to charge a small amount for their app. Apple can get its commission from that. Afterwards, WeChat can credit their users for the purchase.

 

[gnasher729]

To me, this is a slippery slope. We use the Cash app by Square to transfer money to each other all the time. Is Apple going to start taking 30% when I deposit funds into my square app?

No, because the App Store rules say that this app cannot use in-app purchases and therefore isn't even allowed to give Apple a cut. Apple takes a cut for things that end up on your device. They do not take a cut for things that don't end up on your device.

Hypothetically, Amazon could have an Apple app where you can buy eBooks to download on your phone or get mailed real books. They would have to pay 30% for the eBooks, but couldn't use in-app purchasing and wouldn't pay for the mailed real books. For the cash app, there's no cash on your phone. It's in your bank account. Therefore, by Apple's rules, it must be free.

If Apple was providing the back end infrastructure to deliver the in-App content, and to enable the transaction, then it deserves compensation. But, clearly, this is not the case. Apple wants compensation for the fact that the activity is occurring on their hardware—which is bulls**t. Why is this a condition for iPhones and not for identical activities on the Mac?

It's not because the transaction happens on your device. It's because / if the transaction is for something that ends up on your device. Everyone has to play by the same rules.

 

[macfacts]

...
A tip is exactly the same as an IAP, just with a different name. To treat it as anything else undermines the foundation of how Apple pays for the infrastructure that serves up apps: the datacenters, transaction processing, etc. ...

Developers already pay a $99 yearly fee to Apple ($299 for big devs) and iPhone users pay a "yearly" fee of $650 for those services.

 

[ArneK]

No, because the App Store rules say that this app cannot use in-app purchases and therefore isn't even allowed to give Apple a cut. Apple takes a cut for things that end up on your device. They do not take a cut for things that don't end up on your device.

Hypothetically, Amazon could have an Apple app where you can buy eBooks to download on your phone or get mailed real books. They would have to pay 30% for the eBooks, but couldn't use in-app purchasing and wouldn't pay for the mailed real books. For the cash app, there's no cash on your phone. It's in your bank account. Therefore, by Apple's rules, it must be free.

With your argument they shouldn't be allowed to take 30% then. After all you can view the content for free but you can choose to support the artist with some money. You don't buy anything, you don't get anything in return. Neither in real life nor on your phone

 

[reyesmac]

At some point the "Greed is good" American style of business is going to hit a wall if they have no leverage in the country their trying to strong arm. The model they have is fine in countries where people are used to being nickeled and dimed. Will it be possible everywhere? Only time will tell. They should rely on the people running the Chinese Apple divisions to give them good advice on what they can and can't get away with over there.

 

[Stevez67]

So, WeChat thought they found a loophole through which they could increase their revenue on the iOS platform by calling an in-app payment for service, albeit a voluntary payment, a "tip." Apple applies the App Store rules evenly and either gets a cut of the transaction or the transactions stop. Perfectly fine. If it walks like a duck and quacks like a duck ...

 

[drewyboy]

If Apple was providing the back end infrastructure to deliver the in-App content, and to enable the transaction, then it deserves compensation. But, clearly, this is not the case. Apple wants compensation for the fact that the activity is occurring on their hardware—which is bulls**t. Why is this a condition for iPhones and not for identical activities on the Mac?

Apple will argue that the WeChat app is free. That Apple allows it to compete with their own iMessage app, and delivers it using their App Store. Somehow, Apple wants to be compensated. That expectation might have been reasonable when the iPhone was exclusive. Now it’s a weak negotiating point. Arguably, Apple’s appeal is its hardware and OS legacy. But without third party apps, most people would get very little use from Apple’s products.

Personally, I resent that Apple requires me to acquire my apps from their store exclusively, especially since that same condition is not true with the Mac (yet). You can’t preach that you’re protecting your customer’s user experience when the same is possible on MacOS without the restrictions. This “walled garden”… is it to keep bad guys out… or is it to keep you walled in?

I think the solution is for WeChat to charge a small amount for their app. Apple can get its commission from that. Afterwards, WeChat can credit their users for the purchase.

Some see it as a paradise, other see it as a prison. My view is slowly shifting towards the latter.

 

[coolspot18]

To me, this is a slippery slope. We use the Cash app by Square to transfer money to each other all the time. Is Apple going to start taking 30% when I deposit funds into my square app?

Apparently - because the tip function in these Chinese apps is really no different than that.

 

[Vjosullivan]

Apple really had no choice but to close up this loophole. It's an exception that undermines the rule.

A tip is exactly the same as an IAP, just with a different name. To treat it as anything else undermines the foundation of how Apple pays for the infrastructure that serves up apps: the datacenters, transaction processing, etc.

Makes total sense. If it leads to regulatory action against Apple, they are in no worse position than losing a huge portion of revenue to the loophole.

The only rules being undermined are ones made up by Apple in the first place.

I'm not sure why you think it makes sense. Nothing is being purchased. It's just money being transferred from one account to another. Most of the infrastructure involved isn't even Apple's. Would you defend banks taking a 30% cut for a simple cash transfer?

 

[biscuit0819]

30% of every transfer is clearly ludicrous but isn't is possible Apple are getting pressured by apps in this space (i.e. PayPal)? I can see both sides but I feel like this is a battle Apple can't win.

 

[trainwrecka]

There really needs to be a change in all this 30% cut stuff. Sure, take it from a video game or an app where it is clear the feature you are paying for, makes the value of the app go up.

But hindering users from using the Kindle Store and similar services is a joke. Why not charge 30% every time I use the Amazon or Target app?

 

[Victor Mortimer]

Wait, so if they're doing this... What's next? Is Apple going to want a 30% cut if I use my credit union app to pay a bill? If I send money with the PayPal app?

VERY bad precedent, Apple. There are very few things that could possibly make my next phone not be an iPhone, but doing something like that would be one of them.

 

[78Bandit]

Apparently - because the tip function in these Chinese apps is really no different than that.

The content is displayed and consumed on the device. People aren't displaying the content and then ordering a physical copy of the artwork, article, or book. Money transfers don't generally fall under the in-app purchase guidelines because generally you are using things like Square to pay for something you consumed or purchased in person like a meal, a painting, or something similar.

You can bet your bottom dollar if someone set up an outside payment ecosystem using an Apple app that was primarily designed to facilitate payment for digital content like ebooks, apps, or games that Apple would enforce the 30% assessment on that too. It all depends on what your are purchasing. Digital goods delivered to the phone are subject to Apple's surcharge.

 

[EdRed]

Apple gets 30 percent for doing nothing

 

[bobbie424242]

Enjoy your future of computing with more and more locking down and control, with Apple, Google and others taking inspiration from North Korea. It makes you wish computer history was rewritten, with app stores and locked down OSes being invented first.

 

[mi7chy]

Before it's determined that Cook's greed is shining through, how is WeChat tipping treated on Android? Does Google also force a 30% cut? At Google I/O 2017 the other day Google announced Superchat as a way to fund content creators with donations.

 

[Rogifan]

The AppStore rules are quite simple: On one hand, Apple takes their cut for anything that ends up on the user's phone. On the other hand, an app must not use in-app purchases and therefore Apple gets nothing for things that don't end up on your phone. So: Tipping the pizza delivery man is free. Tipping the author of an eBook that arrived on your phone for free must be done through in-app purchases.

I have a nook app on my iPad. I purchase books from Barnes & Noble on their website via Safari and read those books on my iPad. What is so special about doing the same via an app that Apple deserves a cut? I can understand if the app developer is choosing to use Apple to process the payment but plenty of developers would rather use their own which is why they either don't offer IAP or if they do increase the price 30%.
[doublepost=1495123140][/doublepost]

It all depends on what your are purchasing. Digital goods delivered to the phone are subject to Apple's surcharge.

Unless you purchase via Safari or some other browser. Even though everything you do with said content on your device is exactly the same as if you had purchased it in-app.

 

[randyhudson]

So if I use the Bank of America iPhone app to transfer funds to another bank account, Apple should get 30%?

 

[fogelbaby]

Greedy miser CEO. Really good way to tick people off.

Kind of bizarre. There are lot of apps that allow people to send each other money and apple doesn't take a 30% cut of those (and if they did such apps would never be viable). Why is this any different?

 

[Urban Joe]

Kind of bizarre. There are lot of apps that allow people to send each other money and apple doesn't take a 30% cut of those (and if they did such apps would never be viable). Why is this any different?

I know right...I guess Cook thinks he's ALSO a master at the Chinese art of war. Will be interesting to see how this turns out.

 

[bluespark]

It should be possible for a user to voluntarily tip a developer without involuntarily giving a cut to Apple. If anything, Apple should be encouraging this practice (in China and elsewhere), even to the point of providing a mechanism to securely facilitate it. While this theoretically could affect Apple's revenue stream from paid apps, it would almost certainly pay for itself by helping to ensure a vibrant and healthy developer community. It's not like tipping removes the incentive to charge money for apps.

 

[BurgDog]

Apple must be getting a pretty good revenue stream from Uber and Lyft

 

[yanksfan114]

The tipping feature which is the subject of the article is not always paying the app developer, but rather paying content creators. It's akin to tipping people on Snapchat or Facebook for posting good pictures. Sure, the app developer processes the payment and acts as the middle man between the content creator and the tipper, but that is not so different from Venmo or PayPal which process the payments and act as the middleman between the payer and payee.

Yes I understand. The problem is that if the payments are going to only the developer, it might be a back end way to get around the app store's revenue cut model.

 

[BigDO]

So, WeChat thought they found a loophole through which they could increase their revenue on the iOS platform by calling an in-app payment for service, albeit a voluntary payment, a "tip." Apple applies the App Store rules evenly and either gets a cut of the transaction or the transactions stop. Perfectly fine. If it walks like a duck and quacks like a duck ...

Another ignorant comment, even after multiple posters explained that WeChat is not making any revenue and that this is basically a user - user transfer.