Apple’s App Store business model may be in danger in China

“If Apple Inc. is lucky, a 10-page complaint posted on social media by a Chinese law firm might be a minor annoyance resulting in little more than some bad press,” Tim Culpan writes for Bloomberg Gadfly. “However… Apple’s app store business model may be in danger.”

“The lawyers represent around 20 app developers who are alleging that Apple abuses its dominant position, and they’ve filed complaints to two key regulators,” Culpan writes. “One grievance is that the U.S. company failed to provide a full Chinese version of its app store terms and conditions. While perhaps not spurious, Apple can easily rectify this problem and may even face a rap-on-the-knuckles fine. Far more serious is the developers’ claim that Apple’s 30 percent cut of in-app transactions is excessive.”

“Should regulators there decide that a 30 percent cut — especially on lucrative in-app purchases — is excessive or unlawful, then the implications may be felt globally,” Culpan writes. “If it wants to protect its new Fortune 100 business, Apple needs to be sure this annoyance in China disappears quietly.”

Read more in the full article here.

MacDailyNews Take: In the full article, Culpan writes, “Cook himself boasts that the company garners twice the revenue of the Google Play store, despite iOS having around one-sixth the global share,” without noting that Google charges the same in-app transaction fees, making it sound like only Apple is charging such fees.

Cook’s “boast” isn’t about what Culpan thinks it is and/or wants his readers to think it is. Cook is merely highlighting the FACT that Apple’s iOS users are worth 12X what those who settle for Android are worth (2X the revenue on 1/6th of the market share) because Apple’s iOS users have disposable income and the proven will to spend it. That makes Apple’s App Store much more valuable to developers. If anything, Apple should be charging 12X what Google charges for in-app transactions, but they aren’t. If anything, developers – those who even bother with Android apps – should be complaining about Google’s excessive in-app transaction fees.

Misunderstanding Apple Services – August 7, 2017
Dispelling the Apple Services myth – May 3, 2017
Apple’s Services business: $7 billion in revenue last quarter alone – May 3, 2017
Apple’s Services (App Store, Apple Music, Apple Pay) business is an unstoppable juggernaut that’s still just gathering strength – May 3, 2017
MacDailyNews presents live notes from Apple’s Q217 conference call – May 2, 2017
Apple Q217 earnings beats on EPS, misses on revenue – May 2, 2017


  1. American tech companies are willing their sell their grandmas to the Chinese to make a few pennies. They are willing to sacrifice their integrity (not that they really have any), and willing to give up their IP for the China market.

    China govt knows this and dangles that carrot in front of the CEOs, knowing they will chomp at it every time. Problem is, they never get the carrot, but they keep on chomping.

    They never get the carrot and they never will, because the donkey is too stupid.

  2. Obviously, Apple blundered by not providing (a) ‘Chinese’ (both Mandarin and Cantonese?) version(s) of the App Store’s Terms and Conditions. Oops. (o_O)

    As for Apple’s 30% cut of app sales revenue, that’s mere whining and bitching. 30% is standard, not just at Apple. If the Chinese lawyers press this case, they’re doing it just to suck in money as they will eventually LOSE. There are no international legal grounds for their complaint. I can’t imagine the Chinese government getting involved and creating their own standard.

    As for the comment above from ‘China Sucks’:
    • There have been companies that turned their back on China: Criminal Nation. Example: Google.
    • Apple has been bludgeoned and beaten by China’s usual abuse of non-Chinese companies. Example: The excremental lawsuit over the ‘iPhone’ brand in China. Generally, when Apple has compromised, the result has been reasonably sane and in accordance with world accepted human rights while bowing to Chinese citizen surveillance demands. Example: Apple having to put servers for Chinese customers within the country of China, behind ‘The Great Firewall of China’.

    However, China’s request to force ‘licensing’ of VPN service apps provided in Chinese Apple App Store goes beyond reason IMHO. It’s pure citizen abuse and I can’t support Apple kowtowing to this totalitarian garbage. It’s too much IMHO. Apple ends up being a direct enabler of Chinese citizen abuse. That’s bad and entirely contrary to Apple’s historic manifesto.

    And yet, what’s a company to do when they want to do business in a country with a whacked-out, criminal, abusive government? Watch what’s going on with India versus Apple! It’s lunatic. India’s government has a whole new definition of crazy they’re attempting to shove at Apple.

    1. Yes, Google pulled out of China officially.
      Android devices are still sold there and are the source of most of the android malware in the world.
      Since users cannot get apps from the official store, they go to unofficial sources and get infected.
      That’s exactly what Apple needs to do.

      1. Before you get all high and mighty about the supposed “freedom of expression over anything else” you seem to value so highly (never mind it’ll be suicide for Apple), perhaps this small news item flew under your pea-sized brain:

        Apple is allowing Test Flight (where you can install apps outside of the App Store) to have as many as 30,000 testers per app.

        Gee. I wonder what that’ll do…? Ponder. Ponder.

        (Yes, it’s not a perfect answer but it’s a reasonable compromise and a good way to get around government censorship of the official App Store.)

  3. Apple makes almost as much money in China as all of Europe (England, Germany , France, Spain etc etc ) COMBINED.

    it used to make more than that but sales have been dropping for a few quarters (plus currency issues).
    So pulling out of China is basically Apple suicide.

    Apple has tried making products in other countries like Brazil. Results have not been so good.

    Terry Gou Foxconn CEO on Brazil : “”Brazilian workers’ wages are very high. But Brazilians, as soon as they hear ‘soccer,’ they stop working. And there’s all the dancing. It’s crazy,” he told the Wall Street Journal in 2010.”

    I don’t know about Brazil but I’ve worked in Asia for over 10 years when I was younger (I speak Cantonese) and my brother longer, he was tech manager in Shanghai for several years. I know there’s a lot of racist attitudes about Asians here (perhaps due to fear ?), that they only able to survive due to ‘cheap labour’ etc., Sure there are bad things about their governments etc but you have to see what the workers can do , the determination, efficiency etc. they can put up a giant several football field sized factory in weeks.

    Think about it: if it was just ‘cheap labour’ then why don’t bunches of foreign companies move ELSEWHERE where labour is CHEAPER?

    China has lent about ONE TRILLION dollars to USA (without this and similar from JAPAN etc the USA govt. would be broke). Having so many Asian governments (China, Taiwan, Korea, Japan, Singapore etc) with SURPLUS in this day and age and able to invest it shows that are certain ‘efficiencies’ in these countries.

    Also if China can buy near as much Apple stuff as ALL of Europe (i.e plenty of citizens have cash) do we think they are that poor or stupid ?

    (I believe the Confucian type ethics that treasures EDUCATION where hard work is expected and people obey elders and seniors makes good workers, the ‘elders’ translating to managers. Asian workers are easy to teach and manage, they usually just follow what you tell them to do)

    The USA is still a great country etc but some people UNDERESTIMATING what others can do (due to too much ‘we are greatest’ propaganda since birth ) is a blindspot , that’s why the government is NOT investing enough in education (or demanding enough from teachers and students ), reforming taxes, balancing the budget etc.

    ( The USA has a top layer of very smart students who will end up making the next Facebook etc but in GENERAL the population is pretty poorly educated — go compare test scores with other countries , In Math PEW research stats shows USA 38 out of 71 countries for example and FALLING … . What this means is that you can have a USA factory with very very good top engineers etc but you won’t have a giant base of highly educated lower waged line workers you can draw on … )

    (I know people want to take a gun and shoot me right now but that ain’t going to change the stats… )

    Don’t want to go too much into USA politics etc.
    or get into flame war but I’m just pointing out facts.
    I already expect to be one starred and yelled at already…

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