SEEING THE VALUE

Thanks to China, Apple has updated its app store policy to allow tipping

Apple has taken a tip from China’s internet users.

A recent update to the company’s global App Store Guidelines shows that Apple now permits users to send monetary tips to one another—a practice which, while widespread in China, the company had previously shown ambivalence towards. The revision shows that Apple is now accommodating China’s vast tip economy, and also highlights the power that Chinese social media giant Tencent has over China’s internet culture, as well as the foreign companies that operate in the country.

Earlier this year, bloggers and media outlets in China bemoaned the news that WeChat, a chat app and popular publishing platform owned by Tencent, had removed a button inside its iOS app that let users tip bloggers using cash (as in real cash) stored inside WeChat’s virtual wallet.

The feature’s removal likely stemmed from pressure by Apple. The company enforces a strict policy of taking a 30% cut on all transactions inside iOS apps whenever users buy virtual goods. It calls this practice “in-app purchases” (IAP). The widespread tipping inside WeChat, however, was occurring outside of Apple’s control, and the company received no cut any time a user made a donation to the creator of a WeChat post they enjoyed.

In June, Apple updated its App Store Review Guidelines to suggest that tipping would not be allowed unless users paid tips using virtual currency—implying that Apple, somewhere along the way, would take its cut. The update read:

Apps may use in-app purchase currencies to enable customers to “tip” digital content providers in the app. Apps may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than IAP.

That line has stayed in the updated guidelines. However, the company added an additional section that permits tipping without Apple taking a fee. A new item in section 3.2.1 reads:

Apps may enable individual users to give a monetary gift to another individual without using in-app purchase, provided that (a) the gift is a completely optional choice by the giver, and (b) 100% of the funds go to the receiver of the gift. However, a gift that is connected to or associated at any point in time with receiving digital content or services must use in-app purchase.

That suggests a tip given out of appreciation after reading a post will be allowed. Questions nevertheless remain: Will WeChat’s tip button come back? Does “digital content” include a WeChat post or video? Neither Apple nor Tencent responded immediately to Quartz’s questions about the policy change.

Regardless, China’s online tipping economy—which occurs not just among WeChat writers, but in livestreaming apps and in restaurants, has placed Apple in a position where it has no choice but to take a side. Nearly 11% of WeChat users have used its tip feature, and among that group, 37% say they give five to 10 yuan ($0.72 to $1.45) every month (link in Chinese). It’s not uncommon for some popular WeChat bloggers to make hundreds of dollars a day just from tips.

In part due to WeChat’s 963 million users (pdf, p. 3), Tencent has a chokehold on China’s social media and games industries. Some have even speculated that WeChat’s popularity in China could cause iPhone sales to slow there, as users will be content with cheaper handsets so long as they allow for doing everything they want to do in WeChat.

This means that Apple will have to foster a close relationship Tencent. Already, it appears to be getting started. In its most recent earnings call, CEO Tim Cook called Tencent one of Apple’s “biggest best developers” and added the company is “looking forward to working with them even more to build even greater experiences for our mutual users in China.”

Earlier this month, a photograph circulated on Chinese social media showing Cook standing beside Tencent founder Pony Ma and WeChat mastermind Allen Zhang.

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