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Huawei Technologies is nearing an agreement to allow Tencent's ( OTCPK:TCEHY ) ( OTCPK:TCTZF ) WeChat super app to run fully on its HarmonyOS mobile operating system without sharing any revenue, Bloomberg News reported.
The move is likely aimed at defending its new lead over Apple (AAPL).) In China. The potential agreement, under which Huawei will not charge Tencent any fees for in-app transactions within the WeChat world, comes after discussions between the two Chinese tech giants spanning several months, according to the report. He added Citing people familiar with the matter.
Huawei is reportedly considering charging for in-app purchases on HarmonyOS, signaling growing confidence in competing with Apple in the smartphone space. The company was considering charging a lower commission than the usual 30% cut that Apple and Alphabet's (GOOG) Google charges for payments made through their mobile stores for app, game, movie and music subscriptions, among other things.
So far, Huawei has not charged a fee for Harmony OS as an incentive to attract developers and publishers.
The deal with Tencent WeChat will likely make it a rare exception in Huawei's plan to start charging for services in its app store.
In return, Tencent will maintain and update the WeChat app, which millions of people in China rely on for payments and gaming, among other things, the report added.
Currently, users can download WeChat on Huawei phones and use it, but there is no deal requiring Tencent to provide regular updates to the app. The agreement, which is expected to have no impact on phone owners, also requires Huawei to continue hosting and supporting WeChat.
The potential agreement is important for Huawei as well, because the company is moving to a new version of Harmony which could lose access to WeChat if Tencent does not continue to support the app.
The deal could be beneficial for Tencent as it looks to generate more sales from WeChat mini-programs, its platform for simple versions of popular apps like Didi. Tencent generated 1.5 trillion yuan (about $207 billion) in gross merchandise value from its mini programs in the September quarter last year, according to the report.
Discussions are ongoing, and it is still possible that the two companies decide not to move forward with the deal.
Huawei has also reached out to ByteDance's Douyin (BDNCE), a Chinese sister app to TikTok, in an attempt to discuss revenue sharing, but ByteDance has not shown interest in starting talks, the report added.
Huawei has moved to its self-built Harmony OS after US sanctions prevented it from working with Google, the maker of the Android operating system.
Harmony operating system I exceeded Apple's iOS operating system ranked by market share in China in the first quarter of 2024 (January-March), as the country's customers lined up to buy Huawei's flagship phones, according to Counterpoint Research.