Foreign media: Apple has fired at least 5 Chinese app store employees for improper transactions with game manufacturers

On October 19th, according to insiders, Apple fired at least five Chinese App Store employees after conducting an internal investigation into commercial misconduct. During the investigation, Apple discovered violations by these employees, such as unauthorized contact with mobile game developers or consultants

On October 19th, according to insiders, Apple fired at least five Chinese App Store employees after conducting an internal investigation into commercial misconduct. During the investigation, Apple discovered violations by these employees, such as unauthorized contact with mobile game developers or consultants.

A person familiar with the matter stated that Apple discovered these violations during its internal audit conducted in 2022 and launched an investigation, which was not completed until mid year of this year. The app store business brings huge profits to Apple every year, especially from the mobile gaming industry. When Apple CEO Tim Cook visited China this week, he praised Chinese application developers and watched a mobile game competition hosted by the company.

The dismissed employees involve multiple departments, who help developers obtain app listing licenses, provide recommendations for app revenue improvement, and decide which apps should be displayed on the App Store homepage. These measures typically have a significant impact on the success of the application.

The investigation involved employees engaging in unauthorized contact with game developers and their advisors, who claimed that they could obtain approval for the game or obtain recommendations in the app store. One of the insiders said that the violations also include accepting free catering and nightclub entertainment services provided by game developers.

After investigating commercial misconduct

Some of the five App Store employees who were fired did not comment on this article, while others were unable to contact or did not respond to comment requests.

An Apple spokesperson stated in a statement: "Apple will not comment on specific allegations, but rather hopes that employees worldwide will comply with strict ethical and business conduct policies. We will thoroughly investigate reports of misconduct and take decisive action, including dismissal, as appropriate

Excessive employee power raises doubts

This investigation and dismissal have raised doubts about the rights of Apple employees, who operate one of Apple's most profitable businesses. App Store employees are free to choose which apps to recommend on the homepage and receive advice from the App Store business manager responsible for collaborating with large developers.

Reviewers have the right to approve or reject applications based on the company's content and functional guidelines. This process may have subjectivity and a mentality of luck, which makes many developers feel frustrated. Employees in the developer relations department are responsible for promoting new tools and technologies to application developers. They can also serve as contacts when developers encounter issues with obtaining Apple approval or updating applications.

Apple has strict regulations regarding employee contact with developers, such as employees engaged in application review and editing work not being allowed to meet with developers without prior approval. Employees responsible for developer relations and business management can meet with developers, but are not allowed to accept expensive gifts or banquets.

Apple employees who have resigned have stated that the company not only attempts to distance developers from some app store employees, but also attempts to separate different departments of the app store to prevent the dissemination of developers' confidential information and limit their influence on their employees.

A person familiar with the matter stated that although it is not possible to understand all the facts of Apple's internal investigation, the dismissed employees do not have the right to directly approve or refuse the application's listing. According to a departing reviewer, this power is usually controlled by employees outside of China. However, the roles played by these dismissed employees may affect which apps are recommended in the app store, but it is currently unclear whether they have recommended apps from developers who have had improper contact with them.

A crucial 'cash cow'

The App Store has been Apple's main revenue channel since its launch in China in 2010. Apple employees who have resigned stated that the United States and China are the first and second largest markets for app store revenue, with the two countries accounting for more than two-thirds of app store revenue.

Although Apple did not disclose the specific revenue of the app store, according to media analysis of Apple's public statements, the global app store business, including the United States and China, had global sales of approximately $70 billion to $85 billion in 2022.

According to expert testimony in the lawsuit between Apple and game developer EpicGames, Apple draws commissions of up to 30% from the sales of digital products by application developers, while a few years ago, the operating profit margin of Apple's App Store business was around 75% to 78%.

Apple's investigation into its Chinese app store comes as global regulatory agencies are increasing their scrutiny of the company's app store business. As early as 2021, the US Department of Justice was preparing to file a lawsuit against Apple, inquiring about how Apple strictly controls the iPhone, including the App Store, and its customers and competitors.

Last year, the European Union passed the Digital Markets Act, which requires so-called "gatekeepers" such as Apple to ensure that users have equal access to their operating systems. This means that Apple needs to allow developers to bypass its European app store and distribute apps through its own website or other means, which may reduce Apple's commission. (Small)