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After streams of negative publicity and protests from drivers, on April 17, Yidao Yongche’s (易到用车) CEO publicly admitted they were in the midst of a cash crunch. Given recent restrictions around the country on drivers, past subsidy wars, and a market share of a mere 3.6% (Didi’s is 94.6%), this should not come as a surprise. What was surprising was how he explained it: He claimed that LeEco, the company’s controlling shareholder, diverted an RMB 1.3 billion fund originally earmarked for the company so they could service their own debts. While LeEco and other representatives of Yidao have denied the veracity of the claim, the founding members, including the CEO, have publicly resigned.

This yet another nail in the coffin for LeEco. Not only have they delayed payment to US employees, but TechNode has also heard from Chinese employees that their pay has been delayed as well. And the list goes on:

It is difficult to say how this saga will end, but what is clear is that they lost focus and expanded much faster than their company or business could handle. Rather than focusing on their core business of content delivery and the devices to deliver it (read: phones and TVs), Jia Yueting was overtaken by his ambition to lead the world into a new age. This leap, however much inspired, was built on shaky ground that is now crumbling.

Apple vs WeChat

Another conflict to go public this week is the one between the declining king of smartphones and the ascending emperor of social: WeChat announced this week that they have disabled the tipping function on the iOS version of their app.

In June of 2016, Apple changed their App Store developer TOS to include stipulations that apps could not link to payments outside of iOS’s in-app purchase (IAP) system. For Tencent (and any other merchants processing payments on iOS), 30% of all revenue made inside iOS goes to Apple. In the announcement, the WeChat team claimed that they had been in negotiations with Apple to exclude the tipping function from the “Apple tax” (my words). However, the two companies were not able to come to any agreement.

This is an interesting and concerning development for a few different reasons:

  1. The tipping function was a Patreon-like system that allowed content consumers to directly reward content creators. This could be further inducement for creators to look to other platforms to release their content. WeChat is already saturated with content, making it more and more difficult for content creators and brands to effectively leverage their reach to engage with their audience and customers.
  2. It is interesting that WeChat chose to argue with Apple about this specific feature and then to publicly state that the Apple’s rules forced them to remove it. WeChat claims that they were not making any money off this, so in a direct monetary sense, it really is no skin off their nose if people get tipped or not. For creators, it was just one perk of being on the platform.
  3. There have been discussions and rumors surrounding the relationship between Apple and WeChat for quite some time. Many in the local developer community have speculated that the mini-programs (小程序) are actually a precursor to WeChat creating their own mobile OS. It is also believed that this recent spat reveals deeper tensions between the two companies, with WeChat feeling the chafe of having to compromise on their platform just to ensure they can still exist on another.

While Apple’s overall market share has declined, their products are still seen as a status symbol. That being said, almost all of their software services have been supplanted by local offerings, including Apple Pay. Making an operating system and jumping into the smartphone platform fray would be no easy task, but the incentives for WeChat to do just that may have already started aligning.

John Artman is the Editor in Chief for TechNode, the leading English information source for news and insight into China’s tech and startups, and co-host of the China Tech Talk podcast, a regular discussion...

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