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Apple Legalizes Tips In App Store Update, In Exchange For A 30 Percent Cut

In the latest update to its App Store, Apple has solved the issue of in-app tipping by legalizing the feature.

In exchange for activating a new revenue stream for app developers and content creators, Apple placed a 30 percent tax on voluntary tips.

The Controversy Of In-App Tips

In-app tips have generated controversy for Apple, particularly in dealing with app developers from China. Chinese livestreaming video apps, including Yizhibo and Yinke, have heavily used the feature to allow users to send virtual gifts to performers.

Last month, Apple turned its attentions toward in-app tips, as the feature sidestepped the 30 percent tax that Apple receives from in-app purchases. The developers argued that the tips were donations and not purchases, placing the feature in a gray area. Meanwhile, Apple threatened to remove popular messaging app WeChat and other social platforms from the App Store if developers did not pay the fees or remove tips from their apps.

Tipping has not yet caught on in the United States, but it has proven to be a lucrative venture in China for content creators. About a tenth of WeChat's 889 million users have used the feature, with half of them claiming that they spend 5 yuan to 10 yuan per month on tips, which is around 72 cents to $1.45.

Apple Legalizes Tipping In iOS Apps

The updated terms for Apple's App Store now classifies in-app tips under the same category as in-app purchases, legalizing tips that users wish to send to app developers.

However, as with in-app purchases, Apple will now take a 30 percent cut from all tips that apps will generate.

In a policy update for the App Store that coincides with the iOS 11 developer release, Apple added the following line: "Apps may use in-app purchase currencies to enable customers to 'tip' digital content providers in the app."

The change means that Apple is now acknowledging tipping features, and developers can now incorporate the feature in all kinds of iOS apps without fearing repercussions.

The developers will also need to determine how the tips that users send, minus Apple's 30 percent cut, will be distributed. For video streaming platforms, developers may decide to take a 20 percent cut to pass on 50 percent of the tips to content creators, which will open up a new and legal path for monetizing videos.

While content creators will surely feel the difference of Apple taking a 30 percent cut from tips, the legalization of the feature could mean that even more users will use the feature to send virtual gifts. In turn, creators will step up their game to make higher-quality content, making this a winning situation for all parties involved.

Updates To Apple App Store

In addition to legalizing tipping, Apple also recently changed the way that the annoying review prompts appear in iOS apps. The App Store rating API, which was released in iOS 10.3 but will be made mandatory in iOS 11, will limit the number of times that review prompts pop up in apps to only three times a year. Users will also be given the option to disable the prompts completely.

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