In the Apple App Store, Apple charges a 30% commission on app purchases and in-app transactions. From the perspective of consumers, if they choose to recharge or make in-game donations using an iPhone, they will be charged a higher amount compared to using other devices.

This additional cost is commonly referred to as the 'Apple Tax'.

Recent media reports indicate that Apple has intensified pressure on Chinese tech giants like Tencent and ByteDance, demanding they cease practices that allow in-app creators to circumvent Apple's 30% cut. Tencent has also acknowledged ongoing negotiations with Apple regarding revenue sharing from WeChat mini-games.

Given Apple's unique global ecosystem, the company is unlikely to abandon or reduce the 'Apple Tax' unless compelled to do so by government regulation or legislation.

So, will China intervene in the 'Apple Tax'?

I. Consumers' Failed Lawsuit Against the 'Apple Tax'

In 2021, a consumer sued Apple for alleged antitrust violations related to the Apple Tax in the Shanghai Intellectual Property Court, requesting that Apple immediately cease abusing its market dominance, including but not limited to ceasing unfair high pricing practices such as charging a 30% commission on in-app purchases (IAPs); and stopping mandatory bundling, exclusive dealing, and refusal to deal practices that restrict in-app purchases to the IAP system.

The Shanghai Intellectual Property Court found that Apple charges a 30% commission in its App Store, but reduces this to 15% for small businesses with annual revenues below $1 million. In comparison, Huawei's AppGallery charges up to 50%, Tencent charges up to 40%, Xiaomi charges up to 50%, and OPPO also charges up to 50%. Additionally, Huawei, Xiaomi, and OPPO impose a 5% channel fee, effectively raising their maximum commission rate to 55%.

The Shanghai Intellectual Property Court ruled:

1. Most Android app stores charge a minimum commission rate higher than Apple's 15%.

2. Some Android app stores charge up to 55%, exceeding Apple's 30%. Therefore, Apple's App Store commission does not significantly exceed the prices charged by other similar business operators for the same or comparable products under the same or similar market conditions.

In May 2024, the court issued a first-instance judgment, rejecting all claims made by the consumer.

II. Intervening in the 'Apple Tax' Necessitates Concurrent Intervention in the 'Hardcore Tax'

The 'Hardcore Alliance' is initiated by a Chinese private enterprise, Wanjia Media, in collaboration with domestic smartphone manufacturers such as Huawei, OPPO, vivo, Honor, Lenovo, Coolpad, Nubia, and Meizu.

The 'Hardcore Alliance' is characterized by 'business sharing,' where any single phone manufacturer can represent the alliance in negotiations, reminiscent of the 'Open Door Policy' and 'equal benefits' demanded by the United States during the late Qing Dynasty.

Virtually all domestic Android phone manufacturers, except Xiaomi, are members of the 'Hardcore Alliance.'

However, Xiaomi also adopts the 'Hardcore Tax' revenue-sharing model similar to that of the 'Hardcore Alliance'.

Based on the precedent set by the Shanghai Intellectual Property Court, the 'Hardcore Tax' is actually higher than the 'Apple Tax,' raising the issue of equal legal treatment for domestic and foreign businesses. If the government were to intervene to regulate or reduce the 'Apple Tax,' similar measures would need to be taken against the 'Hardcore Tax.'

It is widely known that sales of domestic Android phones represented by the 'Hardcore Alliance' significantly outpace those of Apple phones in the Chinese market.

Reducing the 'Apple Tax' would also lead to a corresponding reduction in the 'Hardcore Tax' for domestic phone manufacturers.

This could potentially result in a situation where the intended target (Apple) suffers minimal damage, while the domestic industry suffers disproportionately greater harm ('killing 300 enemies but injuring oneself with 1000 wounds').

Tax reductions or exemptions would undoubtedly benefit consumers and developers but would undoubtedly face fierce opposition from industry players.

This would be a direct threat to the interests of capitalists.

III. The Feasibility of Changing the 'Apple Tax'

In summary, Zhang Dongwei believes that the crux of the 'Apple Tax' issue lies not in the commission rate itself.

Globally, whether it's the 'Apple Tax,' the 'Google Tax,' or the gaming platform's 'Steam Tax,' commission rates tend to hover around 30% or 15%, which has become an industry norm.

Apple's real problem stems from its monopolistic position and the resulting onerous terms.

Apple imposes strict restrictions on app developers, including prohibiting alternative payment options outside of Apple's ecosystem, thereby forcing developers to pay the 'Apple Tax.'

This restrictive capability stems from Apple's closed iOS system.

In May 2024, the Shanghai Intellectual Property Court recognized Apple as the primary operator of the iOS-based smart device app trading platform in mainland China (excluding Hong Kong, Macao, and Taiwan). Although Apple International Sales participates in platform-consumer services, it is an affiliate of Apple Inc., and other operators cannot access this platform, thereby establishing Apple's dominant market position.

Abusing this dominant position by restricting user choices constitutes an antitrust violation.

For instance, in March 2024, Apple was fined €1.8 billion in the EU for alleged antitrust violations related to its treatment of music app developer Spotify.

The EU's Digital Markets Act (DMA) has compelled Apple to implement significant updates to its operating systems in the EU region.

According to Germany's Der Spiegel, these updates include allowing third-party app stores, in-app payments, and web browsers for the first time in Europe.

In June of this year, Japan's parliament passed new legislation modeled after the EU's DMA, requiring tech companies to refrain from blocking third-party app stores, in-app payments, and web browsers. This law is set to take effect by the end of 2025.

Therefore, if Chinese authorities choose to intervene in the 'Apple Tax' issue, they should focus on leveraging the Antimonopoly Law to encourage Apple to open up third-party app store installations, sideloading (direct downloads outside of the App Store), and allowing consumers to freely choose payment methods. This would enable domestic consumers to benefit from the latest global antitrust developments and achieve a more equitable global market.

As for those who prefer using Apple products, that's a matter of personal preference and market economics.

What do you think?