Apple has reportedly taken a stance on social media tipping in China that says the company should get 30% of those tips. This is a huge mistake, in my opinion, and Apple should think differently.
Social Media Tipping
The Wall Street Journal reported that Apple demanded Chinese social media companies to disable their popular tipping features. Social media tipping is not unique to China—it’s popular on Reddit, for instance, and in the U.S. ChangeTip has been making a go of it. It’s already a bid deal in China, thought.
The idea is that I could send you a tip for an insightful post, a clever meme, a great article, or just because you’re the bee’s knees. If one is using cryptocurrency like Bitcoin or Dogecoin, one can tip as little as fractions of a penny. But tipping in fiat currency like the Chinese Yuan or U.S. dollar is possible, too.
As noted above, tipping has taken off, and social media giants like WeChat and many others enable tipping through their platforms. And most of them do it for free, allowing users to send money from one digital wallet to another. It’s free because they’re looking to increase engagement with both the wallets and the broader platforms.
Tipping is Not an In-App Purchase
According to The Journal, Apple’s stance is that money being exchanged via tipping should be subject to the same rules as in-app purchases. In other words, Apple wants 30% each tip, if The Journal‘s sources have it right.
“We don’t charge anything as the platform, but Apple gets 30% for doing nothing,” an unnamed social media executive in China told the newspaper.
Cutting off the Tip of Your Nose to Spite Your Corporate Face
To be fair, it’s also possible Apple is concerned about being held accountable for transactions by Chinese regulatory authorities. Alternately, Apple could be worried about customers holding the company accountable for fraud, or any other number of problems.
The Journal‘s angle, though, is that Apple sees these tips as a way of boosting Chinese revenues when growth of iPhones slowed.
I hope that’s not the case. The idea of Apple claiming 30% when I tip an author—or you—is grossly offensive. It’s also short sighted. Social media tipping is only going to get bigger, and if Apple shuts itself out of that market, it will lose users, especially in China.
There’s no room for Apple to take a cut of people sending money to each other. In my opinion, Apple should take a page from the Chinese companies who see facilitating such transactions as a way of gaining users.
Apple’s entire business model has been built on building the ecosystem to sell hardware. Nickel and diming little people to boost profits stands in stark contrast to what has worked so well for Apple.
One More Thing
Lastly, Apple’s could be preparing the way for its own tipping service other platforms could embed in their apps. As long as Apple isn’t taking a cut, that could be a good thing. Time will tell.