Apple may face backlash in China over demanding App Store cut on tips

Chinese app makers are reportedly upset with Apple after it issued a new policy that recognizes tips as in-app purchases, according to The Wall Street Journal. This means small donations made from inside popular social networks in China will soon be made eligible for Apple’s 30 percent revenue cut.

Unlike in the US and other Western markets, in-app tipping is a more common display of gratitude in China toward writers, developers, and other content creators who give out stuff for free. However, Apple last month demanded app makers disable the tipping function per the new App Store rules, which will now recognize any donation as an official in-app purchase. Those who don’t comply risk being kicked out of the App Store, the WSJ reports.

Tipping is typically done through apps like the massively popular WeChat, which acts much like a mobile operating system with other services bundled inside of it. This results in Chinese consumers making use of services like food delivery and reading the news all from within WeChat’s ecosystem, which encourages users to tip. Apple, until now, hasn’t seen any of that revenue in the same way it does with app downloads and other more traditional in-app purchases.

This debate over tipping is yet another sign that Apple’s relationship with China has become increasingly more fragile. The contention is now a source of concern for the iPhone maker, which has seen the country’s fast-growing population become its largest global software market, with in-app revenues of more than $2 billion in the fourth quarter of 2016 alone, according to the WSJ. And yet Apple’s revenues are falling in China and its market share has fallen behind by local Chinese brands, putting the company on the defensive in what is effectively the most important and lucrative market on the planet.