Apple takes a bite out of app store fees in China

Beijing hinted it wasn’t happy with Cupertino, which weeks later made a change

Apple has cut the fees it charges Chinese developers to sell their apps and other digital goodies.

The company on Thursday posted a news item titled “Adjustments to the China storefront of the App Store on iOS and iPadOS” in which it announced it will drop the commission it charges on app sales and in-app purchases from 30 percent to 25 percent.

The iGiant will also drop the rates it charges small businesses and developers of mini apps from 15 percent to 12 percent.

Apple said the changes came “following discussions with the Chinese regulator.” The company also proclaimed itself “committed to terms that remain fair and transparent to all developers, and to always offering competitive App Store rates to developers distributing apps in China that are no higher than overall rates in other markets.”

It is hard to imagine this decision is only about Apple staying competitive, because the company enjoys a 22 percent share of the Chinese smartphone market and wins 18 percent of its revenue in greater China.

In February, the company surely perceived its Chinese business was at risk when reports suggested Chinese regulators were considering a probe into its app store commissions. Those reports saw Apple’s share price slump by around five percent.

The Register fancies that probe won’t happen now.

China is a unique environment for app stores, in two ways.

One is that China is a Google-free zone, so app stores operated by manufacturers of Android handsets are numerous and well-used. Apple therefore faces more competition in China than elsewhere.

The other major difference in China is the popularity of an app store run by web giant Tencent, which offers both conventional smartphone apps and “mini programs” – apps that run within the WeChat messaging application it operates.

WeChat has 1.4 billion monthly users, most in mainland China, and hundreds of millions of users for mini programs.

The utter ubiquity of WeChat means many Chinese iPhone owners will run the messaging app on Apple hardware, but until last year the company didn’t get a cut of revenue from transactions conducted in mini programs. In November, Cupertino negotiated a 15 percent rate and Tencent played along. Apple now looks to have dropped that rate, which will cost it some cash.

But probably nowhere near as much cash as a more serious bout with Beijing. And Apple China also appears to have avoided the fights that saw other countries demand it open its products to third-party app stores. ®