The trial between Epic Games and Google is revealing a bunch of secret agreements within the industry that are quite curious. They show us that in business, the bigger you are, the more advantages and special conditions you have.
The streaming music service Spotify reached an apparently unique and very generous agreement with Google for payments originating from the Android operating system. Similar to the $8 billion that Google pays to Samsung.
During the trial, Don Harrison, Google’s Head of Global Partnerships, confirmed that Spotify paid a 0% commission when users chose to purchase subscriptions through Spotify’s own system. If users opted for Google as the payment processor, Spotify handed over 4 percent, much less than Google’s more typical commission of 15 percent.
A trial that is exposing secret commercial agreements
Google fought to keep Spotify’s figures secret during its antitrust battle with Epic, arguing that they could harm negotiations with other app developers seeking more generous fees.
Google’s user-choice billing program, launched in 2022, is often described as a reduction of around 4% from the Google Play Store’s 15% fee for developers using their own payment system, lowering the rate to 11%.
Often, this results in minimal or zero savings for developers as they themselves must bear the payment processing cost. In court, Google has focused on advantages like increased flexibility rather than cost savings.
Harrison claims that Spotify’s “unprecedented” popularity justified a “tailored” agreement. “If Spotify doesn’t work well on Play services and basic services, people won’t buy Android phones,” Harrison stated.
As part of the deal, both parties also agreed to allocate $50 million each to a “success fund.” Google acknowledged Harrison’s testimony in a statement to The Verge.
Google declined to disclose names of other developers who have managed to get the company to accept more generous rates.
Netflix was tempted, but rejected it
During the trial, we also learned that Google offered Netflix a special discounted rate of only 10 percent, but Netflix refused. Netflix no longer offers the option to purchase within the app on Android and, as a result, no longer pays anything to Google for distributing its app.
Spotify has frequently complained about in-app purchase fees in the past. By mid-2023, it completely abandoned Apple’s App Store billing system to avoid paying a commission of up to 30 percent.
While Epic has continued its legal battle against both parties, Spotify seems to have found an easier – and much cheaper – way to get its way.