The brave man turns into a dragon, and takes stock of the past and present of th
2024-07-13 / tech
Recently, Apple has once again demanded that Tencent and ByteDance make fundamental changes to the payment models of WeChat and TikTok, or else face the risk of having app updates rejected. This struggle involves not only economic interests but also issues of platform autonomy and user experience. The underlying reason is Apple's "burning" market performance in the Greater China region in recent years.
In the second quarter of this year, Apple's smartphone shipments in the Greater China region fell by another 3.1%, ranking sixth in domestic market share. However, while hardware revenue declined, Apple's software services revenue still grew against the trend. In the third fiscal quarter, the global net sales of this business reached $24.213 billion, a 14% increase from the $21.213 billion in the same period last year. The hero behind the growth of software services revenue is the "Apple tax," with China being a major source country for the "Apple tax" and implementing the highest tax rate standard globally. Naturally, this leads to the aforementioned contradictions between Apple and Tencent, ByteDance.
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So, what exactly is the "Apple tax"? Let's delve into it today.
The App Store is one of the largest mobile application distribution platforms globally and a significant source of income for Apple. All apps listed on the App Store, if they involve in-app purchases (IAP), must use Apple's payment interface and pay Apple a commission of up to 30%, which is known as the "Apple tax." The App Store first appeared on the iPhone 3G with iOS 2.0.1, which was officially released on July 10, 2008. Steve Jobs claimed at the time that "the future belongs to applications" and opened the App Store to third-party developers on this day.
The initial App Store only had 500 apps, but the enthusiasm of developers quickly led to rapid growth of the platform. Today, there are over 1.6 million apps on the App Store, making it one of the world's most powerful software ecosystems. With the support of the App Store, games like "Talking Tom Cat," "Angry Birds," "Fruit Ninja," and "Temple Run" have become globally popular hot IPs.Since its inception, the App Store has provided third-party software vendors with a convenient and efficient sales platform, thereby promoting the mobile software industry into a high-speed and virtuous development track, and establishing a win-win business model for users, developers, and Apple. In this business model, Apple holds the development and management rights of the App Store and is the main controller of the platform. Its main responsibilities include four points: first, providing the platform and development toolkit; second, being responsible for the marketing of applications; third, being responsible for charging and settling with developers on a monthly basis. Lastly, Apple often publicly releases some data analysis materials to help developers understand the recent needs of users and provide guiding opinions, guiding developers in application pricing, price adjustments, or going free.
Of course, all of this is based on a commission of up to 30%. Many developers believe this is an unreasonable monopolistic behavior that deprives them of profits and autonomy. For them, the "Apple tax" means they have to pay 15%-30% of their income to Apple. Especially for small development teams or startups, the break-even line is within a few percentage points. The excessively high "Apple tax" makes it impossible for them to survive, and users may miss out on truly good software or games. This has turned Apple's App Store from a hero to a villain.
Therefore, some developers guide players to make payments outside of Apple's payment system through mini-programs or other means to avoid paying high commissions to Apple. The most famous incident was in 2020, when Epic Games, the game developer with 300 million players for "Fortnite," provided a direct payment channel for players to purchase in-game items to avoid the "Apple tax," bypassing Apple's in-app purchase payment system. As a result, Apple immediately removed "Fortnite" from the App Store for violating payment rules and cut off its iOS/Mac development tool permissions.
Since then, the struggle has been fierce. Japan, South Korea, the European Union, and other countries and regions have passed or amended relevant laws and policies, all of which have prompted Apple to make further concessions on the commission. In January of this year, Apple announced a major update to iOS and the App Store in the European Union, allowing users to download software outside of the app store, and reduced the commission ratio for iOS app developers in the European Union from 30% to 17%, which became the biggest compromise in the history of the "Apple tax."
Looking at China, the Chinese market, as one of the top three revenue sources for Apple, requires "standard companies" to pay a "Apple tax" tax rate of 30%, while small businesses are 15%. In comparison, the United States is 27% and 12%, the European Union is 17% and 10%, and South Korea is 26% and 11%. This explains why mini-game or mini-program developers on platforms like WeChat and TikTok have to bypass Apple's payment system to increase their originally meager profits. However, this is not allowed in Apple's view. It can be anticipated that the contradictions between Apple and Tencent, ByteDance, and other Chinese developers will become deeper and deeper.In fact, the Android store also has a "Google tax," with a commission rate as high as 50% or even 70%, which is higher than Apple's commission. However, at the end of the day, the Android system is open, and third-party payments can be used to avoid the commission. In the future, where the "Apple tax" will go, we will wait and see.
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