A secret Google deal let Spotify completely bypass Android’s app store fees

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Spotify pays 0 percent in commission fees when it uses its own payment processor or 4 percent to pay with Google.

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Music streaming service Spotify struck a seemingly unique and highly generous deal with Google for Android-based payments, according to new testimony in the Epic v. Google trial. On the stand, Google head of global partnerships Don Harrison confirmed Spotify paid a 0 percent commission when users chose to buy subscriptions through Spotify’s own system. If the users picked Google as their payment processor, Spotify handed over 4 percent — dramatically less than Google’s more common 15 percent fee.

Google fought to keep the Spotify numbers private during its antitrust fight with Epic, saying they could damage negotiations with other app developers who might want more generous rates. Google’s User Choice Billing program, launched in 2022, is typically described as shaving about 4 percent off Google’s Play Store commission if developers use their own payment system, bringing down Google’s 15 percent subscription service fee to more like 11 percent. That often ends up saving developers little or no money since they must foot the cost of payment processing themselves. And in court, Google has focused on benefits like greater flexibility rather than cost savings.

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The Google logo and the Epic Games logo photoshopped onto a Monopoly board.

The Google logo and the Epic Games logo photoshopped onto a Monopoly board.

The future of Google’s app store is at stake in a lawsuit by Fortnite publisher Epic Games. Epic sued Google in 2020 after a fight over in-app purchase fees, claiming the Android operating system’s Google Play Store constituted an unlawful monopoly — while Google says its demands would damage Android’s ability to offer a secure user experience and compete with Apple’s iOS.

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But Harrison says Spotify’s “unprecedented” popularity was great enough to justify a “bespoke” deal. “If we don’t have Spotify working properly across Play services and core services, people will not buy Android phones,” Harrison testified. As part of the deal, both parties also agreed to commit $50 million apiece to a “success fund.”

Google acknowledged Harrison’s testimony in a statement to The Verge. “A small number of developers that invest more directly in Android and Play may have different service fees as part of a broader partnership that includes substantial financial investments and product integrations across different form factors,” says spokesperson Dan Jackson. “These key investment partnerships allow us to bring more users to Android and Play by continuously improving the experience for all users and create new opportunities for all developers.”

Google would not name other developers that have gotten the company to agree to more generous rates. During the trial, we learned that Google offered Netflix a special discounted rate of just 10 percent, but Netflix refused. Netflix no longer offers an in-app purchase option on Android and no longer pays Google anything to distribute its app as a result.

Spotify has complained frequently about in-app purchase fees in the past. In mid-2023, it completely dropped support for Apple’s App Store billing system to avoid paying up to a 30 percent commission, and it was one of the highest-profile early members of the Coalition for App Fairness, a group that included Epic and supported the Fortnite publisher’s antitrust suit against Apple and Google. But while Epic has continued its legal battle against both parties, Spotify apparently found an easier — and far cheaper — way out of the Google fight.

This post was originally published on The Verge

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