Apple Cuts App Store Fees in China After Regulatory Pressure

Apple says it will reduce the commission it collects from developers on its App Store in mainland China, reducing a fee that has long drawn complaints from regulators and software companies.

The company announced on Thursday that it will cut its standard commission on in-app purchases and paid transactions to 25%, down from 30%. The change takes effect on Sunday.

Developers in Apple’s small business and mini-apps partner programmes will also pay less, with commission dropping to 12% from 15%.

Mini apps are smaller programs that run inside larger platforms such as WeChat, operated by Tencent.

For Chinese developers, the decision removes part of what many have called the “Apple tax”. Companies that run so-called super apps, including Tencent and ByteDance, host large numbers of these smaller applications built by outside developers.

State-owned newspaper Economic Daily says the fee cut could save Chinese developers more than 6 billion yuan, or about $873 million, each year.

“This adjustment will … improve consumption choices and information transparency,” the newspaper said.

“The premium for digital goods and services on the iOS side will be gradually eliminated, and the prices of membership subscriptions, game recharges, live broadcast tips, mini programs and other scenarios are expected to decrease, which is expected to save consumers up to nearly 1 billion yuan per year.”

Apple did not directly link the decision to regulatory pressure. Still, the change follows discussions with Chinese authorities about App Store fees and policies.

The new commission rates start on March 15, which is World Consumer Rights Day. Chinese state media usually use the day to highlight complaints against companies accused of harming consumer interests.

The App Store commission has been called out around the world, with regulators in the European Union forcing Apple to lower developer commissions to between 10% and 17% in 2024 under new digital market rules.

Pressure has also increased in the United States, where Apple now allows alternative in-app payment methods after legal challenges.

China has taken a close look as well, and authorities have considered whether Apple App Store practices violate antitrust rules, and Chinese consumers filed a complaint over the fee structure last year.

Rich Bishop, founder of AppInChina, which helps foreign developers publish apps in China, said regulators have been involved in discussions with Apple.

“In China’s case, (Apple) have been talking with the IT ministry and other departments, and has been requested or pressured ‌to reduce ⁠their fees,” he said.

The change will apply to Chinese companies and also to international developers whose apps appear on the China App Store.

One example is Duolingo, which Bishop said generates about $50 million in annual revenue from Chinese users.

Apple already adapts its App Store policies to comply with Chinese regulations. In the past, the company removed virtual private network apps after requests from internet regulators.

More changes could come and Chinese authorities may eventually require Apple to collect App Store revenues inside the country rather than overseas. This would increase regulatory oversight of foreign apps operating in China.

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