In the ongoing Epic v. Google trial, testimony revealed a notable deal between Spotify and Google regarding Android-based payments. Google’s Don Harrison, who oversees global partnerships, acknowledged that Spotify was exempt from paying any commission when subscriptions were purchased through Spotify’s own system. In instances where Google’s payment processor was utilized, Spotify only paid a 4 percent commission, significantly lower than the usual 15 percent charged by Google.
Google had initially attempted to keep the details of this arrangement with Spotify confidential during its antitrust litigation with Epic. The concern was that revealing such information might impact Google’s negotiations with other app developers who could demand similar preferential rates. The User Choice Billing program, introduced by Google in 2022, is known for reducing Google’s Play Store commission by approximately 4 percent when developers opt for their own payment systems.
This reduction brings the subscription service fee from 15 percent down to around 11 percent. However, this doesn’t necessarily translate into significant savings for developers, as they have to bear the payment processing costs themselves. In court, Google has emphasized the advantages of this program, such as increased flexibility, rather than focusing on the aspect of cost reduction.
Harrison highlighted that Spotify’s exceptional popularity warranted a special arrangement. He argued that Spotify’s seamless integration with Play services and core services is critical for the Android platform, stating in his testimony, “If we don’t have Spotify working properly across Play services and core services, people will not buy Android phones.” This unique partnership also involved both Spotify and Google committing $50 million each to a “success fund.”
Google, responding to Harrison’s testimony, confirmed this perspective in a statement to The Verge. Dan Jackson, a Google spokesperson, explained, “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.” He emphasized that such strategic investment partnerships are vital for attracting more users to Android and Play, enhancing the overall experience for all users, and creating new opportunities for all developers.
Google has refrained from disclosing the names of other developers who have secured more favorable rates. During the trial, it was revealed that Google had proposed a special discount rate of just 10 percent to Netflix, but the offer was declined. Consequently, Netflix has removed the in-app purchase feature from its Android app and, as a result, no longer pays any fees to Google for app distribution.
Spotify has been a vocal critic of in-app purchase fees. In mid-2023, the company ceased using Apple’s App Store billing system, a move designed to avoid the up to 30 percent commission charges. Spotify was also a prominent early member of the Coalition for App Fairness. This group, which includes Epic, has supported Epic’s antitrust lawsuits against both Apple and Google. However, while Epic continues its legal battle with these tech giants, Spotify appears to have taken a different approach with Google, opting for a negotiation strategy that proved to be both simpler and more cost-effective.