Spotify’s secret deal with Google to skirt the usual 15% fee charged by the tech giant on all Android-based payments was outed in court this week. This arrangement was revealed during the ongoing Epic v. Google trial by Google’s head of global partnerships Don Harrison.
Under this unique agreement, Spotify paid zero commission to Google for subscriptions purchased through Spotify’s own payment system. In cases where Google’s payment processor was used, Spotify only paid a 4% commission, which is significantly lower than the standard 15% taken by Google.
Google had attempted to keep the specifics of this deal confidential, arguing that revealing them could impact negotiations with other app developers seeking similar concessions. Google’s User Choice Billing program, launched in 2022, is known for offering a slight reduction in Google’s Play Store commission for developers using their own payment systems, but this generally results in minimal savings for developers due to the costs of processing payments themselves.
In contrast, the deal with Spotify was justified by Harrison due to the streaming service’s exceptional popularity and importance to Android users. He stated that the absence of a properly functioning Spotify app could deter consumers from purchasing Android phones. Both Google and Spotify also committed $50 million each to a “success fund” as part of their agreement.
A Google spokesperson confirmed Harrison’s testimony, explaining that a few developers who significantly invest in Android and Play might have different service fees as part of broader partnerships. This includes substantial financial investments and product integrations.
The trial has also brought to light Google’s offer of a discounted 10% rate to Netflix, which the streaming service declined. Consequently, Netflix has ceased offering an in-app purchase option on Android, eliminating any need to pay Google for app distribution.
This deal comes amidst Spotify’s vocal criticism of in-app purchase fees, particularly those of Apple’s App Store, where it has completely abandoned the billing system to avoid high commissions. Spotify’s strategic move in its deal with Google presents a stark contrast to Epic Games’ continued legal confrontations with major tech companies over similar issues.
