Huawei and Tencent close to agreement to exclude WeChat from revenue sharing

Lina Portman2 weeks ago

1 2 minutes read

(Bloomberg) — Huawei Technologies Co. is close to a deal to enable Tencent Holdings Ltd.’s WeChat super app. to operate fully on its Harmony mobile platform without sharing any revenue, a concession designed to defend its new lead over Apple Inc. in China. .

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The deal, in which Huawei will agree not to charge Tencent any fees for in-app transactions in the WeChat universe, comes after months of negotiations between the two Shenzhen-based tech giants, according to people with knowledge of the matter. . They declined to be named discussing private company information.

The arrangement will likely make WeChat a rare exception in Huawei's plan to start charging fees for content and services on its app store. Huawei plans to reduce in-app purchases on its Harmony platform and has discussed fees of around 20% with game developers, Bloomberg News reported earlier this week.

In exchange, Tencent will maintain and update the WeChat app that hundreds of millions of Chinese rely on daily for everything from payment to gaming, the sources said.

The deal, once completed, would also be a boon for Tencent as it seeks to generate more sales through mini-programs from WeChat, its platform for lite versions of popular apps such as Didi. Tencent generated 1.5 trillion yuan ($207 billion) in gross merchandise value from its mini programs in the September quarter last year.

Currently, users can download and use WeChat on Huawei handsets, but the two companies do not have a formal agreement requiring Tencent to provide regular updates to the app. The deal, which won't create a perceptible change for phone owners, also requires Huawei to continue hosting and supporting WeChat.

Talks are ongoing and the two sides may still fail to reach an agreement, the sources said. Huawei switched to its in-house Harmony OS after US sanctions prevented it from working with Google, the owner of Android.

Reaching a deal is particularly crucial for Huawei as the company transitions to a new version of Harmony that could lose access to WeChat if Tencent does not continue to support the app. The deal helps ensure WeChat will be ready when Huawei makes its transition.

Huawei also contacted ByteDance Ltd's Douyin. to try to discuss revenue sharing, but the Beijing-based social media company has expressed no interest in opening negotiations, one of the people said.

Huawei, Tencent and ByteDance did not respond to requests for comment.

Huawei's negotiations with Tencent emerged from a broader effort to begin monetizing its smartphone platform, which just overtook Apple's iOS in market share in China. Apple also doesn't take a cut on WeChat transactions, but does take a 30% commission on purchases of WeChat Beans, a virtual currency that users can spend on various in-app features such as tipping a livestreamer , according to people with knowledge of the matter. the question. Apple did not respond to requests for comment.

–With help from Zheping Huang, Jessica Sui and Vlad Savov.