Apple has approved an update to WeChat for the upcoming iPhone 16, signaling a potential thaw in relations between the tech giant and Tencent, the Chinese company behind the massively popular messaging app. The development, reported by Bloomberg, comes as Tencent and Apple continue negotiations over revenue-sharing agreements for WeChat's mini-games ecosystem.
The approval of the WeChat update for Apple's upcoming iPhone lineup is likely to quell speculation about a deteriorating relationship between the two companies, and suggests Apple is committed to maintaining WeChat's presence on its devices, given the app's critical importance in the Chinese market.
Tencent's chief strategy officer, James Mitchell, revealed during an earnings call that the company is in talks with Apple regarding a revenue-sharing deal. The negotiations center around allowing Tencent to accept payments in WeChat mini-games through Apple's payment system, potentially resolving a long-standing point of contention.
With nearly 1.4 billion users in China, WeChat serves as a ubiquitous platform for various services, including bill payments and ticket bookings. While many of these transactions are exempt from Apple's fees, in-app content and online entertainment, such as mini-games, remain subject to Apple's App Store policies.
The rise of mini-games within WeChat has led to developers seeking ways to monetize their creations by selling in-game items. Some have resorted to "steering" practices, guiding players to make payments outside of Apple's ecosystem to avoid fees and improve their profit margins. Apple has been pushing Tencent to close these loopholes, viewing them as violations of its App Store policies.
Apple has also warned ByteDance, the company behind TikTok, about in-app spending policies. However, these aggressive actions reportedly risk alienating content creators in a crucial market at a time when Apple's business practices are under increased global scrutiny.
Unlike in the US, Apple holds a smaller market share in China, failing to make the top five in smartphone sales last quarter. Meanwhile, Chinese companies like Tencent and ByteDance maintain significant control over online content, including games and video platforms. Apple's challenges in the Chinese market were underscored by a 6.5% decline in Greater China revenue for the June quarter.
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