Apple leaning on dominant Chinese companies to comply with App Store payment rules

There has been an unenforced loophole in China's App Store that has allowed developers to funnel in-app payments to external payment processors, and Apple is reportedly leaning on Tencent and ByteDance to make it stop.

Apple had reportedly blocked ByteDance from updating Douyin — essentially TikTok in China unless it prevents developers from having users pay outside the App Store. It hasn't quite gone that far with Tencent, but it has issued a warning that it must do the same for external links in mini-games, or it will block WeChat updates.

For the latter, a Friday report from Bloomberg claims that Apple wants Tencent to shut down in-game chat between mini-game creators and players, which has been key to steering players off the App Store to pay. And, reportedly, Apple is talking to the developers of those games directly as well.

Tencent has reportedly refused Apple's request to shut down the in-game chat to date. It's not clear when Apple's next steps will take place in this matter.

Douyin started an in-app purchase program explicitly bypassing Apple's in-app payment system. This is a blatant violation of the terms of the App Store in China, which is likely why the block on updates is already in place.

Tensions between Apple, China's government, and Chineses customers are already high. Despite not holding a dominant position in the country, Apple has been cited as a dominant ecosystem in the country.

And, the country's regulatory body, without specificity, has said that they want to see fewer "walled gardens" in the country.

Apple has also faced an on-again off-again ban on iPhones in China government buildings and other governmental interests. The fate of that is not clear.

China continues to be an important aspect of Apple's business, and Apple CEO Tim Cook hammered that point home again during Thursday's earnings report.

"If you look at iPhone in particular for Greater China, the install base set a record, and so we continue to be confident in the long-term opportunity in China," Cook said. "I don't know how every chapter of the book reads, but we're very confident in the long term."

While it is not quite yet the size of Europe's market who have the Digital Markets Act regulating the App Store, it is gaining. Greater China accounts for about one-third the iPhone sales volume of North America so far.