Apple Strikes WeChat Deal With Tencent, Will Earn 15% From Purchases In Mini Games, Apps: Report

• Apple requires developers to sign up for the company’s software requirements to qualify for the program.
• Its agreement with Tencent opens up a new revenue stream for the iPhone maker, boosting its booming Services revenue.

Apple Inc. (AAPL) and Tencent Holdings have reached a deal, allowing the iPhone maker to take a 15% cut in exchange for handling payments.

According to a Bloomberg report citing sources familiar with the matter, Apple will receive a 15% cut of purchases of mini games and apps within the WeChat app. Apple and Tencent were in negotiations over this issue for more than a year.

Apple shares were up 0.2% in Thursday’s pre-market trade. Retail sentiment on Stocktwits around the company trended in the ‘bearish’ territory at the time of writing.

Apple’s Demands

The iPhone maker had demanded that Tencent fix the loopholes used by app makers to direct users to external payment services, circumventing the 30% app store commission charged by Apple.

The report adds that Apple also requires developers to sign up to the company’s software requirements to qualify for the program. One of such requirements is to help parents share their child’s age range.

New Revenue Stream

Apple’s agreement with Tencent opens up a new revenue stream for the iPhone maker, boosting its booming Services revenue, which hit a new all-time high during the company’s fiscal fourth quarter (Q4).

WeChat’s mini games are a source of multi-billion-dollar revenue for Tencent. The service contributed to 32.3 billion yuan ($4.5 billion) in revenue for the company during the September quarter, according to the report.

A 15% cut would bring in several hundred million dollars in revenue for Apple from Tencent alone.

AAPL stock is up 9% year-to-date and 22% over the past 12 months.

Also See: El-Erian Reportedly Says Affordability Debate Ignores A Key Factor – Rising Income Anxiety

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