Why is Tencent taking the Tim Sweeney approach to dealing with App Stores?

• Tencent has yanked DnF Mobile from many Chinese app stores
• The official reason is the end of licencing agreements
• But is Tencent pulling a page from Sweeney's book and taking on app store dominance?

Yesterday it was announced that Tencent had pulled Dungeon & Fighter Mobile, the hotly-anticipated (and highly successful) entry in their DnF series, from certain app stores in China. This is despite the game only launching in May, and while it was blamed on licensing issues the real reason may be a bit more complex.

For Tencent, the grievances, in particular, seemed to be that the cut taken by app stores was too excessive to justify keeping their game on these services. Starting to sound familiar? Yes, it sounds like Tencent is beginning to take a page out of Epic Games, and Tim Sweeney's playbook and is now playing hardball with app stores.

But why? And what does it mean for you and me? Well read on and find out.

The Background

We won’t go into detail on the actual particulars of the Epic v Apple debacle. But in brief, Epic Games retroactively added the option to make in-app purchases directly from them into their hit battle royale, Fortnite. This bypassed the usual 30% fee on said purchases levied by Google Play and the iOS App Store. Fortnite gets yanked from sale, Epic pursues legal action, and here we are today, with developers and these companies still duking it out in the courts.

Now, it’s worth noting in the case of Tencent’s grievances, while the company isn’t hurting for money (given it’s the biggest gaming company by revenue in the world) the fee cut taken by Chinese app stores is indeed quite a bit larger, a very beefy 50%. So it’s no surprise that Tencent has decided to start moving against them.

In China, Huawei is the largest phone manufacturer, accounting for nearly half of all phone sales. No surprise then that even a gaming giant like Tencent is reliant on using their preinstalled app store in order to reach players, and is thus liable to fall victim to their fees.

Huawei and Tencent in particular have gone head to head in the past, with some of the latter’s games being pulled from the Huawei app store back in 2021. Although this was resolved shortly after, it’s clear that it wasn’t on amicable terms.

It’s worth noting that this is not the same situation as Fortnite of course. Tencent has in fact voluntarily retracted their game after the expiry of the short-term licensing contract. And in their statement on the matter, they actively point out existing players to download from them directly. It’s sneaky, shrewd, and probably a bit underhanded, but it’s also quite clever.

Is it too much?

Now, to be clear, we’re not shedding any tears for Epic, Tencent, or really any company involved in this. We're not boasting of our extreme moral fortitude, of course, it’s just a simple fact that none of these companies are really hurting for money.

Tencent, in fact, has seen massive success from their release of DnF's hotly-anticipated release in China, and clearly, they think that tempting existing players to download from them directly is a winning strategy.

But at the same time, although we can recognise neither Tencent nor Epic games are (or were) in dire need of that 30/50% cut, we can also recognise that the app stores in this situation are taking advantage of developers regardless. 50% is, after all, even more than the oft-complained about 30% Apple takes.

These fees, and the outsized influence of these app stores in restricting access by developers to their ecosystems, means that they’re beholden to the fees included without much alternative. Well, none except what Tencent are doing, which is bringing players direct to them.

And while the Chinese market is very different to the virtual duopoly we have, or have had with Google and Apple, it’s nonetheless a very similar situation. If you want your game to be accessible to a wide audience, you need to play by the rules, even if those aren’t particularly fair.

So, bottom line, are we shedding tears for Tencent? Not really, they’ll be fine regardless. But could this at least prompt some rethinks on how these fees work, and hopefully work its way down to developers and publishers for whom even a slight change in them would mean the world? Hopefully.

Will there be change?

Of course, there’s the additional wrinkle. While Epic Games laid down the gauntlet and prompted a sudden wave of legislative interest in opening up the ecosystems of Google and Apple, Tencent has done no such thing (yet, at least).

Of course, part of that can be attributed to the notoriously sluggish, but monolithic hand of Chinese legislators. As a rule, it takes Chinese authorities a long time to react, but when they do they tend to come down hard on those involved, whether that be individuals or companies themselves.

Remember, being a tech giant in China is no defence against the government. Tencent and other companies saw a severe restriction in-game licences and were hit hard by newfound restrictions on gaming (despite a subsequent u-turn on the most egregious policies). So it stands to reason that Tencent is not eager to shout from the rooftops like Epic did.

They could also be learning from experience. Bear in mind it’s been nearly half a decade since Fortnite was removed from the app store, and there’s no sign of it returning until roughly 2025. So while Epic can be indirectly credited with breaking open the Apple ecosystem, their attempt to use guerilla tactics backfired on them too.

Not only that, but Tencent seems to shy away from taking on iOS, especially given that Dungeon & Fighter Mobile is now the top-grossing game on that plaform for four weeks in a row. Side-loading on Android is easier, and thus bypassing these platforms is a lot more feasible than taking on the still monolithic Apple.

Does it mean anything to us?

Well, yes actually. Bear in mind that Tencent is the world’s biggest gaming company by revenue. We’ve noted before that they seem to be very, very eager to push outside the restrictions of their home country. And while we know some people preach doom and gloom, we don’t believe that they’re intent on somehow taking over.

But it does mean we could see a potential Embracer situation. And if there’s anything the past few months have taught us, it’s that gaming under a small number of companies can see many talented developers laid off. And while mobile has mostly weathered it, if Tencent spreads its wings, buoyed by newfound revenue, it could mean more oversight and accountability to shareholders.

Remember, Tencent does also own a share (nearly 50% in fact) in Epic Games themselves. And while we're pretty sure it's not the case, it does strengthen the idea that they might have taken inspiration for this move from the House of Sweeney itself.

So is Tencent maybe gearing up to try this with more of their games? Are they hoping to take a step back from Android storefronts to get more control over their own revenue? Maybe.

But that’s very much an ‘if’ not a ‘when’. For now, we’ll be watching closely to see if Tencent can indeed sidestep the power of their country’s app stores. And if not, what they’ll have to do if they come crawling back?