Key Takeaways:
- Huawei will not charge Tencent for WeChat in-app transactions on HarmonyOS.
- This deal helps Huawei maintain its lead over Apple in China.
- Tencent benefits by driving more sales from WeChat’s mini programs.
What Happened?
Huawei Technologies Co. is nearing a groundbreaking deal with Tencent Holdings Ltd. to allow the WeChat super app to operate on Huawei’s HarmonyOS without sharing any revenue. After months of negotiations, Huawei will not charge Tencent a fee for in-app transactions within the WeChat ecosystem.
This decision follows Huawei’s broader strategy to monetize its smartphone platform, which recently surpassed Apple’s iOS in market share in China. Tencent generated an astounding 1.5 trillion yuan ($207 billion) in gross merchandise value from WeChat’s mini programs in the last September quarter.
Why It Matters?
This deal is crucial for both Huawei and Tencent. Huawei needs WeChat to ensure a seamless transition to its new HarmonyOS version, especially since WeChat is integral to millions of Chinese users’ daily lives. By offering WeChat without transaction fees, Huawei strengthens its competitive edge over Apple, which charges a 30% commission on purchases of WeChat Beans.
Tencent benefits by maintaining and updating WeChat on Huawei devices, potentially driving more sales from its mini programs. This collaboration may set a precedent for other tech companies and influence market dynamics significantly.
What’s Next?
Expect Huawei to continue its efforts to monetize its platform, possibly extending negotiations to other major apps like ByteDance’s Douyin. Watch for any shifts in Huawei’s market share and user base as this deal solidifies.
Investors should also monitor how Apple responds to this competitive pressure in China. The ongoing talks signal a potential trend of tech giants forming strategic alliances to dominate local markets, which could lead to new revenue models and market strategies.
