A Secret Google Deal Let Spotify Completely Bypass Android's App Store Fees

An anonymous reader quotes a report from The Verge: 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. [...] 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.

how is this fair?

[toutankh]

I have no idea about the legality of such deals but it sounds like it should be illegal in a functioning society, since it gives a competitive advantage to Spotify over their competitors, and encourages monopoly.

Re:how is this fair?

[ShanghaiBill]

Different pricing for various reasons is extremely common. More the rule than the exception.

Should airlines be allowed to offer different ticket prices? Should used car dealers be allowed to make deals? Should Walmart be allowed to have clearance sales?

Where do you draw the line?

Bureaucrats setting prices doesn't seem like such a good idea.

Re: how is this fair?

[topham]

Zero isn't a price.

This was likely done to provide leverage in the Spotify/Apple lawsuit/negotiation.

If evidence turns up the deal was based on that it'll blow up even bigger.

Re:

[Registered Coward v2]

Zero isn't a price.

This was likely done to provide leverage in the Spotify/Apple lawsuit/negotiation.

If evidence turns up the deal was based on that it'll blow up even bigger.

OTOH, Google could have decided having Spotify and Netflix on Android was critical to getting people to use Android and was willing to cut a deal; unlike Apple.

Re:

[tlhIngan]

OTOH, Google could have decided having Spotify and Netflix on Android was critical to getting people to use Android and was willing to cut a deal; unlike Apple.

The Spotify-Apple lawsuit really took off after Apple Music launched - prior to that it was really more of an irritant that Spotify had to keep paying App Store fees.

Spotify has been available on both platforms far longer than the lawsuit ever was.

Although, chances are Spotify started making all the noise about app store fees purely because they got

Re:

[Opportunist]

None of them are enjoying a de-facto monopoly.

Try an example where there is a non-government monopoly and we talk.

Re:

[mjwx]

Different pricing for various reasons is extremely common. More the rule than the exception.

Should airlines be allowed to offer different ticket prices? Should used car dealers be allowed to make deals? Should Walmart be allowed to have clearance sales?

Where do you draw the line?

This.

I'm no Libertardian but this is just free market capitalism. This kind of thing happens all the time, no laws were broken so I don't see the problem. It's like complaining that a company that buys 100,000 laptops can get a better deal out of Dell than you can on a single laptop.

I'm certain this isn't the only sweetheart deal Google has done and there's nothing illegal about it, it's barely into the realm of morally ambigious so the faux outrage isn't necessary.

Re:

[Registered Coward v2]

I have no idea about the legality of such deals but it sounds like it should be illegal in a functioning society, since it gives a competitive advantage to Spotify over their competitors, and encourages monopoly.

First of all, monopolies are not automatically illegal. Companies are free to cut special deals based on perceived business value. Spotify offers free trials, should that be illegal as it gives them an advantage over companies that can't afford the costs?

Re: how is this fair?

[RegistrationIsDumb83]

Amen. Forcing devs to pay a percentage fee was never fair. Google/ iOS should charge a flat fee for app review, and flat download fees, etc. But getting a massive percentage royalty because they're a duopoly was never fair market competition.

Re:

[nightflameauto]

I have no idea about the legality of such deals but it sounds like it should be illegal in a functioning society, since it gives a competitive advantage to Spotify over their competitors, and encourages monopoly.

A functioning society? So long as the rich get richer, it's functioning PRECISELY as designed. Morality, ethics, fairness? What do those pesky issues have to do with increasing profits? Such small thinking is why you aren't one of the oligarchs, and can not dare to question their god(i.e. profit)-given right to rule us.

Re:

[MachineShedFred]

I imagine the counter-argument would be "there is nothing preventing Pandora or Apple Music or whomever from negotiating the pricing for their offerings, but any negotiated deal is going to be determined by the user volume, and they just don't have Spotify numbers."

You look for the intersection

[aldousd666]

It's not just about maximizing one number. Companies look for profits to be maximized at the intersection of all of their influencing factors. On one equation you graph the profit you would expect to receive from fees. On another you graph the amount of money you stand to leave on the table if you do not grab any of this revenue. You look where on the graph those two intersect, In this case it was around 4% per installation. That's how you decide. How to price something and that's what they did. This is no mystery.

Re:

[bill_mcgonigle]

eh, some Google exec just read this article and didn't check the date:

https://www.digitalmusicnews.c... [digitalmusicnews.com]

The Animal Farm chronicles

[fleeped]

All animals are equal, but some animals are more equal than others, as usual. Hope Google gets some slapping and not just on the wrist

Re:

[Opportunist]

Those wrists could use a good slashing, though...

George was right.

[ThePawArmy]

Look it’s a small club and you ain’t in it. If we let you in it, it won’t be a small club anymore, it would just be everyone.

What's That?

[The Cat]

Google is picking winners and losers? Does Amazon know about this? Say it isn't soooooooo...

What's That?

[The Cat]

Google is picking winners and losers? Say it isn't soooooo....