Apple App Store's Chinese Customers Get New Way to Pay for Purchases
August 30 2017 - 3:56AM
Dow Jones News
By Alyssa Abkowitz
BEIJING-- Apple Inc. is now allowing Chinese customers to use
popular local mobile-payment system WeChat Pay for purchases in its
App Store, underscoring the expanding reach of the service owned by
technology titan Tencent Holdings Ltd.
Apple's decision to accept payments from the service came
despite recent tensions with Tencent, including over the Chinese
company's rollout this year of a "mini-program" system that has
been seen as a competitor to the App Store.
"We are committed to offering customers across our ecosystem a
variety of payment options that are simple and convenient," Apple
said in a statement.
In the second quarter of this year, Apple's App Store pulled in
more revenue in China--an estimated $2.2 billion--than in any other
market, according to mobile-analytics firm App Annie.
Tencent's latest victory comes as it challenges the more
established Alipay mobile-payment system backed by local rival
Alibaba Group Holding Ltd. As WeChat Pay, which controls 40% of the
Chinese market, has gained wider acceptance, Alipay's market share
has fallen from 80% in 2014 to about 50% currently, according to
data from iResearch Consulting Group. Apple began accepting App
Store payments from Alipay in November 2016 and from state-backed
network UnionPay two years earlier.
WeChat has become an all-purpose smartphone utility in China,
with nearly one billion monthly active users who rely on it for
mobile payments, social messaging and entertainment, among other
functions.
Chinese smartphone users spend so much time on WeChat that some
analysts say they believe it could hurt sales of Apple's
10th-anniversary iPhone expected in September, since consumers here
won't see the need to upgrade their handsets as long as they can
access the platform.
Apple has said it views Tencent, one of the world's biggest
players in mobile games, as a partner. On an earnings call with
analysts earlier this month, Chief Executive Tim Cook said that
Tencent is "one of our biggest and best developers" and that Apple
looked forward to working with the company "even more."
However, the decision to accept WeChat Pay comes as Apple
struggles to gain traction with its own mobile-payment system,
Apple Pay, which made its debut in China in May 2016. The system's
footprint in the country's market is negligible, according to
iResearch.
Also, Apple has recently sparred with Tencent over purchases in
the App Store. Earlier this year, Apple forced the Chinese
company's messaging app WeChat to disable its "tip" function to
comply with App Store rules. The function allowed WeChat users to
give small amounts of money to authors and other content creators
as gratuities via transfers from mobile-wallet accounts. Apple
considered these payments to be in-app purchases, of which it takes
a 30% cut.
Following Apple's decision to accept WeChat Pay, Chinese
netizens on social media brought up the tipping spat. "Apple
finally lowers its head to Tencent," one wrote. "Come come come,
every dog will have his day. Now it's [Tencent Chief Executive]
Pony [Ma]'s turn to get the 30% fee," wrote another.
Earlier this month, a group of 28 Chinese app developers filed a
complaint alleging antitrust violations by Apple, including
excessive fees for in-app purchases. The State Administration for
Industry and Commerce and the Ministry of Industry and Information
Technology told The Wall Street Journal in mid-August they were
reviewing the complaint.
Apple has said that "most submissions in China are reviewed and
approved to be on the store within 48 hours, or less." The company
also has said its App Store guidelines apply equally to all
developers in every country and that if an app is rejected or
removed, developers may request a review to restore it in a timely
manner.
Xiao Xiao contributed to this article.
Write to Alyssa Abkowitz at alyssa.abkowitz@wsj.com
(END) Dow Jones Newswires
August 30, 2017 03:41 ET (07:41 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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