China's State Administration for Market Regulation (SAMR) has been closely studying Apple's policies and negotiating with the company since last year. The main focus is on a 30% commission on in-app purchases and restrictions on the use of alternative payment services, Bloomberg sources said.
Chinese regulators are paying special attention to whether Apple's fees for local developers are too high. They are also analyzing whether the ban on third-party app stores and payment methods restricts competition and harms Chinese consumers.
“If Apple resists making changes, the government may launch a formal investigation,” Bloomberg sources say.
The talks reportedly stemmed from long-standing disputes between Apple and developers, including Tencent and ByteDance. An August report noted that Apple had been pressuring these companies to make significant changes to two of China's most popular apps to close loopholes that allowed them to avoid the standard 30% commission.
Apple's position in China is particularly vulnerable. The country is the main production base for iPhones and the company's second largest market after the US.