Why TikTok is mostly OK despite offering IAPs on the web

Yesterday TechCrunch reported that “TikTok may be routing around the App Store to save money on commissions,” and as such, could be in trouble with Apple for offering in-app purchases (IAPs) on the web. But that’s only partially true.

Here’s why …

Buy on the web, IAPs on the web

The “discovery” is that TikTok offers a web store where people can buy coins, which would then be used in-app in order to boost your videos or tip other creators. 

 

That is true: such a web store exists, and I’ve visited it, and it does indeed offer a discount off the price of coins available in-app of 25% … a number which is very coincidentally almost the amount that TikTok would pay Apple in commission for in-app purchases, minus some additional transaction fees that TikTok would incur when processing payments itself.

You can buy as few as 70 coins, but with the “Custom” option, you can buy up to 500,000 coins for $5,300 U.S. at once. This is clearly targeted at the big influencer marketing studios that are looking to boost many videos hard, not so much individual creators who just want to give their videos a little shot in the arm.

App Store Guidelines problem?

Once upon a time, back in the day, IAPs on the web was definitely not OK, and Apple was very religious about this: purchases for use that might be used in-app needed to be actually purchased in the app.

This was Fortnite’s original sin in 2020:

“Epic Games … started allowing Fortnite payments by web. Click the link in Fortnite, go to Epic’s site, buy the skin, go back to the app, and BOOM … no 30% cut for Apple. Apple booted the app from the App Store, and Epic sued.”

However, since then there’s been many legal and regulatory changes. 

One, granted by Apple way back in 2021 as a way to settle a developer lawsuit, was an update to App store guidelines that allows app publishers to inform users/players/customers of alternative payment methods outside of their app. That was reaffirmed in 2023 in one of the antitrust cases Epic Games brought against Apple. And other lawsuits and regulations such as the EU’s Digital Markets Act have pushed Apple to allow more payment freedom as well.

So external payments have been live for some time now, with significant downsides that I highlighted.

But wait, there’s more: TikTok is not just an app

But there’s something significantly different about IAPs on the web — a mobile app on iOS and Android pointing users to an e-commerce site — compared to a multiplatform service, not just a mobile app, enabling e-commerce wherever it does business.

And that’s what TikTok is: it’s also available on the web.

As such TikTok has every right to ask users to make payments on the web.

And Apple’s own guidelines confirm this in guideline 3.1.3(b) Multiplatform Services:

“Apps that operate across multiple platforms may allow users to access content, subscriptions, or features they have acquired in your app on other platforms or your web site, including consumable items in multi-platform games.”

Which seems to indicate that all is well.

But wait, there’s 1 little caveat

So all is good and Apple and TikTok are now best buds, despite Apple losing IAP revenue? Perhaps not quite exactly.

Because what I copied above from guideline 3.1.3(b) about Multiplatform Services isn’t the entire guideline. There’s just a little bit more:

“ … provided those items are also available as in-app purchases within the app.”

Hmmm …

Yes, you can buy coins inside the iOS app. But last time I checked, the most you can buy is 16,500 for about $350 … about 6% as much as you can get on the web. Remember, you can order 500,000 coins for $5,300 in TikTok’s web store.

So Apple could conceivably talk to TikTok and say that this condition is not met.

At which point TikTok could come to Apple and say that the base “item” here is a coin, and coins are indeed available on the the web and in the iOS app, and therefore the App Store guideline has been fully and completely fulfilled, and the exact number available on each platform is irrelevant. 

At which point it gets more challenging.

(Or TikTok could make a 500,000-coin IAP available in the iOS app, if they chose. In December of 2022, Apple increased the maximum in-app payment price to $9,999.99.)

Summing up

TikTok is a multiplatform service, not just a mobile app, and as such is fully within its right to offer products for purchase on the open web, or IAPs on the web, if you like. Things might get a little sticky with Apple, but TikTok at least has a case that it is fully in compliance with App Store guidelines.

And besides … could Apple really kick one of the biggest services on the planet off the App Store?

I guess anything is possible.

I’ve previously written about how direct to consumer (D2C) can work for mobile games, and you can get the summary in this Growth Masterminds episode: