Apple forces Line to remove the ability to send virtual items as gifts from its iOS app

Asian mobile messaging service Line is seeing early success with its monetization model — to the tune of $58 million in revenue for Q1 2013 — but there’s a little bad news today as the company has withdrawn the gift sharing feature from its iOS app at the request of Apple.

“We received a request directly from Apple who operates the App Store, that this sticker gifting function will have to be withdrawn from the app,” the company wrote on its English language blog, without going into further detail.

The news means an end to the gifting function that allows iOS users to send the stickers — which are a kind of rich emoticon that typically sell for $1.49-$1.99 per pack — to friends, and will also mean an end to users being able to buy Line Coins expressly for gifting. Gifting remains intact on the Android and other versions of Line, and users on iDevices can still receive gifts from friends that use non-iOS platforms.

Virtual goods are a huge part of Line’s business, and the company says 30 percent of its revenue in the first quarter came via stickers. That’s around $17 million in just three months.

Line doesn’t break down its revenue for stickers or the what proportion of its 150 million users are on each mobile platform, so we’ve no way of knowing exactly how significant this will be on its revenue. It will most likely be minor, but it could be an annoyance to users within highly engaged peer groups.

Line’s home market Japan is its largest market with some 40 million users, and unsurprisingly the country accounts for a whopping 80 percent of its revenues. While users in the West may wonder why anyone would want to spent $2 giving a friend virtual stickers, the concept is not so ridiculous in Asia, particularly in Japan.

The issue is most likely down to the fact that, by asking users to pay for gifts using virtual coins, Line does not share the revenue with Apple. That goes against its policy which sees it take a cut of revenue from in-app purchases and other transactions that occur on its iOS platform

Update: Putting paid to this theory, it transpires that the coins are in fact available as an in-app purchase. App Annie analytics lists Line Coins under its top in-app purchases (image here) — hat tip @khangtoh for pointing this out. That would suggest that Line has fallen foul of a different Apple regulation — but, at this point, isn’t clear exactly which one. It remains to be seen if Apple will take any other companies to task over this issue, whatever it may be.

We’ve reached out to Apple and Line to see if either can shed more light on this.

Headline image via Line