Apple has agreed to lower commissions on WeChat mini-app purchases. What does this mean?

One of China's largest tech giants, Tencent, has struck a deal with Apple under which the iPhone maker will process payments and receive 15% of purchases from mini-apps and games inside WeChat, Bloomberg reports. WeChat is an app that more than a billion Chinese users rely on for a host of routine tasks, from paying bills to booking movie tickets, the agency explained.

The agreed rate is half the iPhone's usual 30% commission. The deal with Tencent opens up a new source of revenue for Apple: mini-games hosted entirely inside WeChat brought in 32.3 billion yuan ($4.5 billion) in revenue from the Chinese company's social services in the quarter ended September. The agreement also reduces pressure on Tencent, as Apple had been demanding that the Chinese company close loopholes exploited by app creators. They, according to Apple, were redirecting users to external payment systems, bypassing the iPhone infrastructure, Bloomberg writes.

The details of the talks, which have lasted more than a year, the companies will disclose later, the agency's sources said.

Apple's agreement with Tencent marks an important step toward normalizing relations in the Chinese market, where the U.S. company faces increasing competition from local rivals including Xiaomi and Huawei, Bloomberg notes. It also potentially sets a precedent for other software purchases in China, a market where most phone makers operate through their own independent application platforms, the agency writes.

To be eligible to be listed in Apple's AppStore app catalog, developers must subscribe to certain requirements of the company's software, such as one that helps parents communicate information about a child's age category, one of the agency's interlocutors said.

Tencent shares were down 0.2% at the close of trading in Hong Kong, while Apple securities were unchanged on the New York premarket.

This article was AI-translated and verified by a human editor