Apple, China Battle Over App Store Payments

China and Apple still in iPhone talks (photo: The Tenth Dragon)

China and Apple still in iPhone talks (photo: The Tenth Dragon)


Control over the popular App Store has become the latest stumbling block to Apple introducing the iPhone in China, reports said Monday.

The head of China Mobile sees direct sales of iPhone applications to consumers as a “threat” to its control over 72 percent of the nation’s mobile users, according to news agency Interfax, citing a source with knowledge of negotiations between interim Apple CEO Tim Cook and China Mobile president Wang Jianzhou.

China Mobile views direct credit card sales as interfering with its normal payment method, where it is the middleman between customers and payments. For the App Store to get the carrier’s okay, China Mobile would reportedly need to play a part.

Discussions between Apple and China have broken down three times in a year-and-a-half. The negotiations initially faltered after China Mobile gave thumbs-down to Apple’s usual 20-30 percent of iPhone revenue. Then the carrier, with 634 million subscribers, balked at paying Apple $600 per subsidized iPhone.

One alternative to the iPhone 3G in China could be selling the original iPhone, a move that may better fit countries such as China and India. Both nations have either non-existent or non-compatible 3G networks, argued Canaccord Adams analyst Peter Miskek.

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Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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