On September 10, Apple’s much-anticipated fall product launch went as expected, with one notable highlight being the demo of Honor of Kings: World to showcase Apple’s chip performance and mobile ray tracing technology.
Apple’s close relationship with Tencent, showcased during the event, suggests that the rumored rift between Apple and WeChat may be less likely than previously speculated.
In fact, according to a Bloomberg report from September 6, Apple had already approved the latest WeChat version update, though Apple’s technical advisors were reportedly still unaware of this. Earlier, when The Beijing News reached out to Apple for confirmation, the company stated it hadn’t yet received any notification.
Before the event, rumors circulated that the iPhone 16 might no longer support WeChat, fueling online debates about whether users could live without Apple or WeChat. However, the product launch has since rendered those discussions irrelevant.
The latest dispute between the hardware giant and the software titan stems from China’s recent minigames boom and the massive revenues they generate.
In August, Bloomberg reported that Apple had targeted WeChat’s share of minigame revenue. Previously, WeChat’s iOS version lacked in-app purchases (IAPs) for minigames, allowing users to make purchases through external links and bypass what’s commonly referred to as the “Apple tax”—a 30% commission Apple collects on in-app purchases (IAPs) from apps that earn more than USD 1 million annually.
During Tencent’s Q2 earnings call, chief strategy officer James Mitchell acknowledged the conflict, stating that Tencent hopes to work with Apple to achieve mutually beneficial business goals for both companies, game developers, and users. He added that Tencent seeks to do this under conditions that are economically sustainable and fair.
This isn’t the first time Tencent and Apple have clashed over revenue sharing.
Seven years ago, the two companies disagreed over whether WeChat’s tipping feature should be subject to the Apple tax. Tencent temporarily disabled the tipping feature on iOS until Apple’s app store integrated WeChat Pay in 2018, which resolved the dispute—for a while.
The current disagreement centers on the growing minigames market. According to Ocean Engine data, the market could reach RMB 60 billion (USD 8.4 billion) this year, representing one-fifth of China’s entire gaming industry.
Before Tencent, Mihoyo also attempted to bypass the Apple tax. In August last year, Mihoyo’s community app Hoyolab and its payment center mini program, co-launched with Alipay, were removed from Apple’s app store due to built-in payment and topup features.
However, Tencent is taking a bolder approach than Mihoyo.
Thanks to its early presence and extensive ecosystem in minigames, Tencent has attracted more than 400,000 developers, including both IAP game developers and in-app advertising (IAA) developers, who bring in a large number of active users. For both WeChat and Tencent, minigames are a high-margin business and play a critical role in sustaining the platform’s ecosystem. With China’s active internet user growth slowing and cost-cutting measures failing to reignite growth, minigames have become even more vital to Tencent’s strategy.
For Apple, the 30% tax has never been successfully challenged. When Mihoyo’s attempt to bypass it was discovered, its apps were relisted after removing the payment feature. Apple’s long legal battle with Epic Games also ended in its favor last year.
Nevertheless, Apple has faced antitrust investigations in South Korea, the EU, and the UK in recent years, which have led to some adjustments in its policies. With Apple’s revenue declining for two consecutive quarters, the company is eager to claim a share of the minigames market.
Yet, just as Mihoyo cannot sever ties with Apple, neither can Tencent. With Apple holding nearly 20% of the global smartphone market and a well-established iOS ecosystem, and with Tencent’s dominance in minigames and software, both companies will need to work together to find a solution.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Lan Jie for 36Kr.