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

[Eso]

The apps asking for tips say that Apple does nothing, however, those same apps would be nothing without the App Store. Apple takes care of some marketing, distribution (including bandwidth and storage), moderation, oh, and, let's not forget, the frameworks and tools that make it so easy to develop for the Apple ecosystem.

And how many Macs and iPhones do you think would be sold if there weren't any third party apps for them? They don't make developer tools for charity. They make them so people will create apps for their devices to make them more attractive for consumers. Yet I don't see Apple giving you 30% of their hardware sales.

 

[ErikGrim]

Come on. That's a photo of the app some 5 years ago? That's lazy.

Laziness on part of Tencent in that case. Those are literally the screenshots they are using in the App Store right now.

 

[69Mustang]

The way I see why apple has to add this tax is: If they don't, all in app purchase will become a tip, nobody will pay the 30% ever.

"Want to unlock a level in a game? Send the game developer $5 via paypal and we will unlock it immediately."

The scenario you described has two problems. 1. (bold) That is not an apt nor accurate description of tipping. Neither in this instance nor as it applies to tipping in general. What you described is IAP circumvention. But this ain't that.
Tipping, as it relates to the article seem more akin to this:
Me, you, @sidewinder3000, and 15000 people download a free app on the app store. We all like it to varying degrees. I like it enough to where I tip the dev $0.50. I get nothing in return. You like the app, but not enough to tip. You get nothing in return. SW3K likes the app enough to tip a whole dollar. Yet he still gets nothing in return. The other 14997 people who downloaded the app feel just like you: decent app, ain't tippin' tho. No harm, no foul. This leads me to the 2nd problem. No one in their right mind would have their revenue depend on tipping. The financial success of the app would literally depend on the kindness of strangers. Internet strangers. IAP is the de facto revenue generator in any app ecosystem: gimme $5 for these gold coins which you can use to buy the magic wand needed to complete the level. Tipping is "I think you did a bang up job making this app. To show my appreciation, here's $0.30 for your efforts. You're welcome. Tipping isn't IAP.

Because Apple does not handle your money in these situations. Amazon and eBay do. In IAP, and tipping in this case, Apple does handle your money. Every time Apple provides a market place and handles a transaction, they have to take a cut.

Afaik, that is untrue. Apple does not handle tipping in this case, especially as it relates to WeChat. The tipping is handled from within the app. The tipping bypasses Apple altogether, hence the issue at hand.

 

[femike]

Its a grey area indeed. Arguments can be made both ways. The developers intention is to make money while avoiding the 30% Apple cut, and I have do doubt that the app developers know exactly what they doing. Tipping can be done from the website. However, Apple 30% is too much and it should be reduced to 15%. If this is let thru, it opens the gate for others. There a consequences both ways.

 

[ndolebay]

THIS IS NOT "DEVELOPERS" ASKING FOR TIPS

I'm sure that this will be an unpopular opinion with the loudest Mac Rumors users. However, as a developer of one of the most popular social apps in the App Store, I completely agree with Apple doing this. The apps asking for tips say that Apple does nothing, however, those same apps would be nothing without the App Store. Apple takes care of some marketing, distribution (including bandwidth and storage), moderation, oh, and, let's not forget, the frameworks and tools that make it so easy to develop for the Apple ecosystem.

Developers asking for tips through the app are purposefully bypassing the mechanisms meant for this type of thing, in an effort to stop paying Apple. This not only gives them a leg up on the competition, it also bypasses protections that Apple provides to the consumer.

This is the equivalent to an illegal worker taking cash under the table to hide income from the IRS, while still using all of the public services that our tax dollars provide (like public parks, roads, police, fire, etc.). Then, screaming that they shouldn't have to pay taxes because the government didn't do the work. Disclaimer: I'm all for small government, it was just the most relevant example.

[doublepost=1495159120][/doublepost]

Correct me if I am wrong, but Apple gets a cut of any ad-derived revenue from apps, right?

I suppose we could argue until the cows come home about just how big a cut Apple deserves, but I suspect that from Apple's perspective, tipping represents a way of circumventing its existing IAP rules. I don't think this is about raising revenue; it's simple Apple enforcing what they believe are app-store rules which developers are contractually bound to adhere to.

In this case, more like you follow people who takes good photos (or writes good articles) on instagram, you tip the people for his/her works, now Apple takes 30% of the money you pay for him/her, not the developer.

 

[lazard]

some info from the article

Apple’s latest predicament centers on its App Store. Last month, Apple told several Chinese social-networking apps, including the wildly popular messaging platform WeChat , to disable their “tip” functions to comply with App Store rules, according to executives at WeChat and other companies. That function allows users to send authors and other content creators tips, from a few yuan to hundreds, via transfers from mobile-wallet accounts.

Those transfers are offered by the social-networking apps free of charge, as a way to inspire user engagement.

The Chinese app developers believe that tipping is different from buying a song or making other virtual purchases: Tipping is voluntary and happens after users consume the content, so it’s not a sale but a way to show appreciation.

Chief executives at two companies say that Apple told them if they refused to make the change, updated versions of their apps wouldn’t be made available and they could be kicked out of the App Store.

In a fight between the two, Apple is likely to come out worse off. While many Chinese say they would hate to lose their iPhones, they simply can’t live without WeChat.

 

[ndolebay]

This article is not clearly written and seems to be causing some confusion. The truth of the situation would seem to be one of two senariois:
A) Are Chinese users downloading movies, books, music or apps via the App Store or iTunes for free or a small fee, then tipping them additional $ via the chat apps? or
B) Are Chinese users downloading music, movies and apps to their phone via their computer (or something else) and then tipping via the chat app?

If it's A, then I can see how Apple might feel entitled to their cut, since they are providing the distribution and that would seem to be a clear attempt to skirt full payment via Apple's official marketplaces. If it's B, and users are essentially performing all aspects of the transaction OUTSIDE the Apple marketplace (which still might be a way for content creators to skirt Apple's fee, albeit more elaborate) then it will be much trickier for Apple to justify their take.

If anyone has actual insight on the situation I'd appreciate the 411.

Nothing to do with the movies or musics, books, in wechat, there is a function named "friend circle", more like instagram, people write articles, followers can tip the writer in wechat.

 

[PBRsg]

I really hope that Apple gets a smack on their greedy wrists for trying to exploit a facet of Chinese culture and turn it into a revenue stream. I am sure they will as the China doesn't seem to take their corporate bullying as readily as US and EU.

That's because in China the government does most of the bullying.

 

[macfacts]

Imagine if Ford wanted to take a 30% cut of a pizza driver's tips cause he used a Ford car to make the delivery. People would laugh at them.

 

[mib1800]

What if a "free" app provides a button saying "Buy" but when click opens WeChat app and user pays there?
I don't think Apple can blame WeChat for this.

 

[himanshumodi]

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.

I don't think a tip is like an IAP. In my opinion, it is just like any other app like amazon or uber that allows users to pay someone for consuming their product or service.

I believe they have a problem that WeChat uses QR code - deemed insecure by Apple as against their IAP purchase mechanisms. While Apple is entitled to getting paid for the infrastructure setup to deliver apps - 30% of each financial transaction is certainly not appropriate. Perhaps Apple will allow it if the app uses a payment gateway to enable the micro-transaction if its only security that is bothering them.

If Apple goes down the route of asking WeChat for money for micro-transactions happening through it... where does it stop? Will it charge Amazon for all purchases made on the app? Will it charge banks for any commercial transactions through their app?

 

[rlhamil]

Its a good point, you're using an app to transfer money to a friend so why is it different? I'm sure someone on here will enlighten us to the technical differences, but really its the same thing

And what about donation-ware (something available for free but where you can choose to support the developer)? That's a close analogy to a tip, I think. Or what about the Slice pizza ordering app, does Apple get 30% of the price of your pizza? I seriously doubt it.

IMO, the question is whether not taking a cut of tips is being used as an end-run around the legitimate cut of something that more resembles the existing in-app purchase model. Assurances against that would IMO make an exception all the more reasonable to expect.

 

[matthewhuk]

Serve Apple right is China stuck two fingers up at them!

 

[macs4nw]

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.

An argument could be made that, even though voluntary, these "tips" are still a payment for services rendered, and these voluntary "tips" are a nifty way to circumvent Apple's fees that App developers have agreed to as part of their contract with Apple. No one works for free, and the developers of these social networking Apps expect to get paid for their work somehow. Without collecting these 'voluntary tips', they wouldn't be in business very long.

Having said that, this could obviously backfire for Apple, but I believe they don't have much choice in this case. Not taking a stand now would certainly open the floodgates for developers worldwide to become 'creative' with their payment collection methods.

 

[symphara]

I can't get over the 30%. It's the epitome of greed.

 

[Paulovsky]

Apple has told several Chinese social networking apps to disable their "tip" functions to comply with App Store rules, according to executives at WeChat and other companies.

This is an embarrassing and huge translation mistake! Wechat and other Chinese apps don't do "tipping". They are a full-on, Apple Pay killer mobile payment system used by millions of people every day. I live in China and I carry no cash with me because we use wechat to pay for EVERYTHING. The rent, electricity, pants at the store or pants on amazon, a taxi, coffee, lunch, dinner, a bag of apples at the market or a pancake sold out on the street. It is also used as a way to transfer money between individuals by the use of what they call "hongbao" 红包, that is a traditional way of giving money to family and friends.

Also, in China you simply don't tip. You may pay bribes though

 

[gnasher729]

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.

See, the first line shows you don't know things.

It's not "$299 for big devs". Microsoft pays $99. $299 is for an enterprise license, which allows you to build apps that don't go on the app store, that don't get reviewed by Apple, but that you deliver yourself to users within your enterprise. Like if Walmart wanted an app that is used by all their cashiers, they would get an enterprise license.
[doublepost=1495182852][/doublepost]

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.

"Tipping the developer" = "Paying the developer". Instead of having a free and a paid version, the developer has a free version and expects tips. Possibly tips to enable features that you don't get without "tips". Tips = payments.

 

[nnoble]

This is an embarrassing and huge translation mistake! Wechat and other Chinese apps don't do "tipping". They are a full-on, Apple Pay killer mobile payment system used by millions of people every day. I live in China and I carry no cash with me because we use wechat to pay for EVERYTHING. The rent, electricity, pants at the store or pants on amazon, a taxi, coffee, lunch, dinner, a bag of apples at the market or a pancake sold out on the street. It is also used as a way to transfer money between individuals by the use of what they call "hongbao" 红包, that is a traditional way of giving money to family and friends.

Also, in China you simply don't tip.

Agree. On two consecutive weekends I couldn't use a China Construction Bank (Unipay) debit card, whilst I was left high and dry, others just whipped out their smartphones and paid via WeChat. Without Wechat, who'd want an iPhone in China?

 

[gnasher729]

This is an embarrassing and huge translation mistake! Wechat and other Chinese apps don't do "tipping". They are a full-on, Apple Pay killer mobile payment system used by millions of people every day. I live in China and I carry no cash with me because we use wechat to pay for EVERYTHING. The rent, electricity, pants at the store or pants on amazon, a taxi, coffee, lunch, dinner, a bag of apples at the market or a pancake sold out on the street. It is also used as a way to transfer money between individuals by the use of what they call "hongbao" 红包, that is a traditional way of giving money to family and friends.

And all of that is just fine - unless you pay a "tip" to the app developer, or you pay a tip for content.
[doublepost=1495183042][/doublepost]

What if a "free" app provides a button saying "Buy" but when click opens WeChat app and user pays there?
I don't think Apple can blame WeChat for this.

In that case the "free" app will not be allowed on the app store.
[doublepost=1495183213][/doublepost]

Nonsense. When I buy a clothes directly from Amazon in the Amazon app, Amazon the app developer gets revenue. When I buy a computer on eBay the app, both the seller and eBay the app developer get revenue. Apple doesn't categorize these as In-App Purchase.
Oh, by the way, I guess you also believe that Apple should ask for a cut of every transaction Uber registers, correct?

Apple wants its cut for purchases made on the iPhone, for things that end up on the iPhone again. When you use Uber, there is no product ending up on your phone, therefore no fee charged by Apple.
[doublepost=1495183378][/doublepost]

Do you not know there's a difference between corporate policies and what makes good vs bad PR?

Simple. Lots of developers in the USA and Europe play by the rules. Some a*****s in China decide that the rules don't apply to them. As a European developer, I want Apple to cut off their balls and tell them where to shove them. What you are saying is like sending the bully kid away who punches every other kid on the playground, and then his mom complains that her darling isn't allowed to play.
[doublepost=1495183535][/doublepost]

But you can't buy anything in Amazons app? Purely because Apple will demand and take a 30% cut. That's why you have to go to the website to buy or subscribe for Amazon products.

You can buy anything without any cut _that doesn't get delivered to the iPhone_. For example physical books, CDs, kitchen utensils, holidays, plane tickets, concert tickets, and so on. Apple would take their cut for downloaded or streamed videos or music, or eBooks.
[doublepost=1495183621][/doublepost]

I thought Apple did that already?

You would have to be truly stupid to believe that.
[doublepost=1495183819][/doublepost]

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

They try to present it that way, but it's a lie. You wouldn't have given the artist money if you hadn't got the content.

 

[karaakeha]

And all of that is just fine - unless you pay a "tip" to the app developer, or you pay a tip for content.
[doublepost=1495183042][/doublepost]
In that case the "free" app will not be allowed on the app store.
[doublepost=1495183213][/doublepost]
Apple wants its cut for purchases made on the iPhone, for things that end up on the iPhone again. When you use Uber, there is no product ending up on your phone, therefore no fee charged by Apple.
[doublepost=1495183378][/doublepost]
Simple. Lots of developers in the USA and Europe play by the rules. Some a*****s in China decide that the rules don't apply to them. As a European developer, I want Apple to cut off their balls and tell them where to shove them. What you are saying is like sending the bully kid away who punches every other kid on the playground, and then his mom complains that her darling isn't allowed to play.
[doublepost=1495183535][/doublepost]
You can buy anything without any cut _that doesn't get delivered to the iPhone_. For example physical books, CDs, kitchen utensils, holidays, plane tickets, concert tickets, and so on. Apple would take their cut for downloaded or streamed videos or music, or eBooks.
[doublepost=1495183621][/doublepost]
You would have to be truly stupid to believe that.
[doublepost=1495183819][/doublepost]

They try to present it that way, but it's a lie. You wouldn't have given the artist money if you hadn't got the content.

Apple should apply same rules to each company. in general Chinese companies don't respect copy right anyway.

 

[mayhemburzum]

HAHAHAHAHAHAHA

Amazing. This is like an employer asking for a cut on their employees tips. Apple, you never cease to amaze me.

 

[JosephAW]

Ummm what about bots in telegram? That's sending money. Right?
[doublepost=1495189698][/doublepost]Well, in real Chinese restaurants you don't tip anyway. That western thinking.

 

[fermat-au]

Pretty sure Apple needs WeChat more than WeChat needs Apple...

The issue is, does Tim Cook realise this? If not this could be very bad for Apple in China.

 

[Rogifan]

Imagine if Ford wanted to take a 30% cut of a pizza driver's tips cause he used a Ford car to make the delivery. People would laugh at them.

Hey there are people who think Apple should be getting a cut of Lyft and Uber transactions. If it's right for Apple to charge a "finders fee" for the iOS platform then they shouldn't sell any free apps and users should have to pay something for every app they download.
[doublepost=1495194472][/doublepost]

But you can't buy anything in Amazons app? Purely because Apple will demand and take a 30% cut. That's why you have to go to the website to buy or subscribe for Amazon products.

The only thing you can't buy in Amazon's app is digital media. Esentially anything that would be consumed on the iOS device. Because that would be subject to the 30% fee.

 

[69Mustang]

"Tipping the developer" = "Paying the developer".

You've filled a thread with comments based on something that isn't true. A scenario you created to further a narrative based entirely on a made up premise. Why would you do that? A tip doesn't necessarily go to a dev. A tip can go between users of an app. Using WeChat as an example, you can tip a friend who posted a cool picture in a chat. A friend who wrote and interesting poem. Someone who posted a funny video of a cat dismissively licking it's but while a house burns down. The app developer gets none of that.

Instead of having a free and a paid version, the developer has a free version and expects tips.

What you describe here is simple donation-ware. Except one word: expects. What you should have said was: hopes for; cuz that's all it is - hope. The dev could get something or absolutely nothing. Odds are it will be closer to nothing. No dev would choose to forgo IAP in the hopes of getting revenue through tipping. I'd challenge you to come up with a scenario where it made sense.

Possibly tips to enable features that you don't get without "tips". Tips = payments.

What you're describing here is a manipulation to try to avoid paying the Apple vig. That's plain to see. What you're describing here is also completely made up. No one is doing this. This only serves to bolster and invalid argument.