Apple Approves WeChat Update for iPhone 16

Apple (NASDAQ:AAPL) has reportedly approved a version of Tencent Holdings’ WeChat app to be compatible with the upcoming iPhone 16, providing more time for ongoing negotiations over modifications requested by the U.S. company for China’s leading social media platform.

According to Bloomberg News, Apple recently approved an update to WeChat for the iOS platform that Tencent submitted earlier this week. This update introduces new features in the app’s WeChat Moments, akin to Instagram, as well as enhancements to its live-streaming capabilities.

Bloomberg noted that this approval could dissipate rumors in China suggesting escalating conflict between Apple and Tencent over app store fees, which could potentially lead to WeChat being banned from iPhone 16 devices.

The core of the dispute focuses on Apple’s demand to receive a portion of transactions occurring through WeChat’s mini-games platform, where many independent developers host casual games. Apple has requested Tencent to block links to external payment services within these mini-games, aiming to prevent developers from bypassing Apple’s standard 30% fee. Moreover, it proposed disabling in-game messaging; however, Tencent deemed this too extreme.

Despite Tencent’s resistance to Apple’s demands so far, discussions between the two companies continue. The goal is to reach a compromise that could be integrated into future updates. Analysts confirmed during a recent earnings call that Tencent is negotiating a revenue-sharing arrangement with Apple to allow payments within mini-games to be processed through Apple’s system.

Apple’s strict control over its app ecosystem aims to uphold global quality and security standards. However, its tougher stance in China this year, including similar warnings to TikTok’s owner ByteDance concerning in-app spending, risks alienating developers in a vital market.

In China, where over 1.4 billion users rely on WeChat for various tasks from bill payments to movie ticket bookings, many of these transactions are exempt from Apple’s fees. Still, entertainment services such as mini-games remain subject to these charges. As developers monetize through in-game purchases, some have discovered methods to circumvent Apple’s system to enhance their profit margins. Apple is now urging Tencent to eliminate this practice, known as “steering.”