Tipping is not customary in China, nor do restaurants commonly add a service charge to the bill in lieu of a gratuity. One of the few places where tipping has become common is online, and recently the platforms that encourage it are finding themselves subject to a service charge too.
WeChat, China’s vastly popular social media platform, allows users to tip content creators through the app. But earlier this year Apple, amid heightening tension with Tencent, demanded a 30% cut of those tips as per its In-App Payment Policy (see WiC364).
Tencent refused, and instead suspended the tipping function on iOS versions of its WeChat app. Undeterred, Apple doubled-down on its demands, amending the wording of its policy to reinforce its claim to a 30% stake on all tipping functions used by apps on its Chinese App Store.
Since then, a number of large internet firms have complied. Most recently Sina Weibo agreed to Apple’s terms, surrendering 30% of the tips given on its Weibo Q&A platform to the American firm. To minimise the impact of the tariff on content creators, Weibo has decided to reduce its own cut of the tip revenue from 10% to 5%, Technode reports, but payments to creators will be received more slowly as they will match Apple’s collection cycle, which can take three months.
Toutiao, the $11 billion news aggregator, and Zhihu, dubbed “China’s Quora”, had previously reached what they deemed “a compromise” with Apple. According to China Daily, Zhihu will allow Apple a 32% commission on tips issued through its app, which hardly seems like much of a compromise.
Apple has suffered a backlash in China for its insistence on bagging a percentage from tips. The Global Times decried it as “an act of bullying similar to robbery. If Apple insists on this practice… the image of the company in the Chinese market will be seriously damaged”.
But the battle with WeChat could be the most significant development for the US firm, especially given the ubiquity and stickiness of that app. There is a possibility that some Chinese iOS users will switch to Android-based smartphones in order to utilise WeChat’s full functionality. All eyes will be on Apple’s upcoming release of its iPhone 8 and whether the WeChat spat hurts its China sales.
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