The new iPhone 16 series has arrived as scheduled, dispelling rumors that it would not support WeChat, a concern for many users. However, there has been no new news on the previously heatedly debated issue of "Apple Tax," and the controversy remains unresolved.  

Not long ago, the term "Apple WeChat" trended on Weibo. The dispute over "Apple Tax" between Apple and WeChat once again sparked widespread public concern, especially after rumors emerged on September 2 that iPhone 16 might not support WeChat. Although Apple's official customer service promptly clarified that there was no official notice indicating iPhone 16 would not support WeChat, this incident undoubtedly exacerbated tensions between the two sides over the issue of "Apple Tax." On September 6, the update of WeChat iOS version 8.0.51, coupled with the conclusion of the launch event early on the 10th, directly debunked previous rumors that WeChat might cease updates.

What is Apple Tax? 

If you're a new user planning to purchase an iPhone 16, be sure to read this article carefully. What exactly is Apple Tax? "Apple Tax" refers to the commission charged by Apple on in-app purchases made through its App Store platform, typically ranging from 15% to 30%. This is not a government tax but rather a revenue-sharing mechanism based on platform services, through which Apple derives income from transactions such as in-game items, virtual currencies, and subscription services purchased by users within apps. In contrast, the Android ecosystem does not face this issue.

Taking the Douyin platform as an example, Apple phone users may only receive 70 diamonds for a 10 yuan recharge, while Android users receive 100 diamonds for the same amount. This discrepancy stems from the commission charged by Apple. This revenue-sharing model is legally valid as it is based on the service agreement between users and Apple.

Developers and consumers are generally concerned that Apple's high commission rate may increase purchase costs and compress developers' profit margins, thereby impacting innovation and market competition. In response to this controversy, Apple has adjusted its policies in certain regions, such as the European Union, by reducing commission rates and allowing users to download apps through other channels. However, in the Chinese market, Apple maintains a relatively high commission rate.

To circumvent the high "Apple Tax," some companies have begun exploring alternative payment solutions. For example, I personally use an Android backup phone to recharge Douyin diamonds. Currently, switching phones does not affect diamond balances on the same account, but many games and apps do not share data between iOS and Android versions.

Apple Tax: A "Protection Fee" in the Tech Industry? 

With the Android ecosystem as a reference, Apple Tax is also seen as a controversial "protection fee" in the tech industry. In 2023, it generated approximately $22.34 billion in revenue for Apple, with a significant contribution from the Chinese market, exceeding RMB 40 billion. In China, the Apple Tax rate is as high as 30%, considered the highest globally.

This high rate not only increases operational costs for developers, limits innovation and market competition, but also raises consumer purchase costs, damaging Apple's credibility in the Chinese market.

As a result, some iPhone users seeking fairness have filed lawsuits against Apple. However,Chinese consumers lost their antitrust lawsuit against Apple at first instance, and the controversy over "Apple Tax" continues. 

On May 29, 2024, the Shanghai Intellectual Property Court issued a first-instance ruling in the first antitrust lawsuit filed by a consumer against "Apple Tax." The court acknowledged Apple's dominant market position in China's software market but rejected the plaintiff's request to stop Apple from charging the 30% "Apple Tax" and mandating the use of Apple Pay.

The plaintiff, Mr. Jin, filed a lawsuit against Apple and its Shanghai subsidiary in January 2021, accusing the company of monopoly practices related to its high "Apple Tax" and payment restrictions. "Apple Tax" refers to the 15% to 30% commission charged by Apple on transactions within its App Store. Mr. Jin's attorney, Wang Qiongfei from Zhejiang Kending Law Firm, stated that while respecting the first-instance ruling, they believe Apple's practices constitute an abuse of market dominance and plan to appeal the case to the Supreme People's Court.

The crux of this case lies in whether Apple has engaged in unfair pricing and tying practices. Mr. Jin argues that Apple's payment restrictions deprive consumers of choice and fair trading rights, harming their interests. However, the court found that Apple's IAP (In-App Purchase) module primarily targets developers and does not directly affect consumer interests. Furthermore, Apple's payment policies protect transaction security and maintain a reasonable business model.

Although the court acknowledged Apple's dominant position in the Chinese market, it did not find evidence of exclusionary or restrictive practices. Attorney Wang Qiongfei noted that many iPhone users are unaware they often pay higher prices for membership services than Android users due to using Apple devices. According to Sensor Tower, "Apple Tax" generated approximately $22.34 billion in global revenue for Apple in 2023, with China accounting for over RMB 40 billion.

This lawsuit highlights consumer dissatisfaction with Apple's pricing policies and calls for market fairness. While the lawsuit in China was unsuccessful, there have been successful challenges to Apple Tax globally. Next, let's shift our focus to Europe.

The EU Takes a Slice of the Pie 

The controversy surrounding "Apple Tax" continues to escalate internationally, with the European Union posing a significant challenge. Music streaming giant Spotify and game developer Epic Games have also engaged in legal disputes with Apple over its charging policies.

The EU imposed a record fine of €1.84 billion (approximately RMB 14.2 billion) on Apple, marking a new round of countermeasures in its antitrust investigation. Facing EU pressure, Apple has adopted a more flexible strategy. In iOS 17.4, Apple relaxed policies for developers in the EU's 27 member states, allowing them to use third-party app download channels and payment methods, eliminating the mandatory requirement for Apple Pay, and reducing the "Apple Tax" rate.

This controversy originated from Spotify's formal complaint against Apple. As the largest music streaming service platform globally, Spotify filed a complaint with the European Commission in 2019, accusing Apple of unfair competition, particularly in imposing the 30% "Apple Tax." This prompted Apple to adjust its pricing policies, reducing commission rates from 30% and 15% (for small and medium-sized developers with annual revenue below $1 million) to 17% and 10%, respectively.

The legal conflict between Spotify and Apple exposed potential market abuse by Apple, supporting the global anti-Apple movement. This struggle heightened public awareness of Apple's business practices and set a precedent for other countries to challenge Apple. In China, WeChat plays a leading role in confronting "Apple Tax."

I'm Not Paying Taxes, I'm Giving Red Envelopes 

You might wonder if WeChat can win against Apple. Rest assured, WeChat has already prevailed once, in 2017. That year, Apple extended its "Apple Tax" policy to the WeChat platform, defining user rewards for original content on official accounts as "in-app purchases," demanding a commission.

In response, WeChat removed the reward function from its iOS version in protest.

After a three-month standoff, Apple reassessed its policy and ultimately abandoned its commission requirement for WeChat rewards, stipulating that no platform could take a commission from rewards, and all reward amounts should be transferred in full to content creators. This adjustment temporarily eased tensions between the two sides. Essentially, under the new rules, rewards no longer required mandatory in-app purchases through the App Store, allowing direct transfers to recipients. This meant rewards were no longer subject to Apple's 30% commission. WeChat's strong user base and market influence gave it significant negotiating power in the domestic market.

However, Apple's global insistence on "Apple Tax" and its dominance in the app store mean it's challenging for any developer or platform to fully circumvent its rules.

Nonetheless, as WeChat mini-games grow in popularity and transaction volumes soar, Apple has once again set its sights on this sector, aiming to include in-game purchases within mini-games under the "Apple Tax." With 1.37 billion active users, WeChat's significant position in the Chinese market gives it leverage in negotiations with Apple.

The rapid development of WeChat mini-games and mini-programs has not only brought significant traffic and potential revenue to Tencent but also bolstered WeChat's confidence in confronting Apple's "Apple Tax" policy. Thus, WeChat is fully capable of saying no to Apple.

Mini-Games, Big Pie 

The explosive growth of the mini-games market has reignited the controversy over "Apple Tax." According to reports, Apple recently pressured Tencent and ByteDance to block "loopholes" allowing developers to guide users to external payment systems, bypassing Apple's 30% commission.

The rise of WeChat mini-games signifies a vast market worth tens of billions of yuan, with enormous growth potential. Their success has not only generated significant traffic and revenue for Tencent but also strengthened WeChat's position in negotiations with Apple. However, Apple takes a hard stance on commissions from mini-game top-ups, which affect its core software service revenue interests.

How to Circumvent It 

The game between Apple and Tencent has entered a new phase. Apple discovered "loopholes" in the top-up process for WeChat mini-games, where users obtain payment links through customer service chat interfaces, bypassing IAP for payments. WeChat's business model cleverly avoids Apple's commission mechanism, with most transactions completed through WeChat Pay rather than Apple's IAP. This practice directly challenges the bottom line of Apple's App Store rules. While live-streaming rewards on video accounts are integrated with IAP, they represent a small portion of the overall WeChat ecosystem.

Big Pie 

According to WeChat's official data, there are 1 billion mini-game users, with 500 million monthly active users. Over 240 games generate quarterly revenues exceeding RMB 10 million. Market estimates suggest WeChat mini-games generated approximately RMB 24.2 billion in annual revenue in 2023, with the iOS platform potentially contributing billions of yuan. If Apple could extract 30%, it would generate billions in potential revenue.

Why the Obsession with Apple Tax 

Software services have become a crucial revenue driver for Apple, accounting for 28% of total revenue. The rapidly growing mini-games market, with a gross margin of up to 95%, represents a lucrative gold mine for Apple. While Tencent takes a 40% commission on mini-game top-ups on the Android platform, it currently does not do so on iOS, potentially a stalling tactic in negotiations with Apple. Apple offers "Apple Tax" concessions to small and medium-sized developers with annual revenues below $1 million, at a 15% rate. However, all revenues from WeChat mini-games are attributed to Tencent, disqualifying them from these concessions, effectively creating a "second App Store" scenario that triggers Apple's sensitivities.

Apple faces a challenge in not wanting to create an unfair competitive environment through private agreements with individual companies. Previous disputes with Amazon, Netflix, Spotify, and Epic Games stemmed from Apple's adherence to App Store rules. Now, the "Apple Tax" controversy surrounding mini-games not only tests Apple's policy-making but also shapes the future of the mobile internet ecosystem.

Choice: WeChat! 

One might worry about having to choose between Apple and WeChat, but the reality is that we don't face such a dilemma in the tech giants' rivalry. History shows that such strategies often aim to restrict competition rather than foster win-win situations. Tencent revealed during its earnings call that it is negotiating revenue sharing for WeChat mini-games with Apple, considering transactions through the iOS payment system, implying Apple may earn a share. We welcome both tech giants shining in their respective fields. If a choice must be made, many users may lean towards supporting WeChat.

Recent developments indicate that Apple has approved the latest WeChat version for iPhone 16, buying time for negotiations over in-app purchases. The updated WeChat optimizes social sharing and live-streaming functions, aiming to ease market concerns over escalating disputes. The main controversy centers on the WeChat mini-games platform, where Apple demands blocking external payment links and prohibiting the use of built-in messaging to guide users to other payment methods, ensuring its 30% commission. While Tencent rejected Apple's request to disable in-game messaging entirely, both sides are exploring solutions. Tencent's management expressed a desire for sustainable and fair monetization of in-app transactions, aiming for a tripartite win-win outcome.

With the launch of the iPhone 16 series, this controversy has temporarily subsided, but the battle over "commissions" continues. Will WeChat be able to influence Apple to relax its commission policy on in-app purchases? Only time will tell.