Secret deal between Google & Spotify let music streaming company bypass Play Store fees

In the ongoing Epic vs Google trial, new revelations indicate that Spotify struck an unconventional and seemingly generous deal with Google regarding Android-based payments.

Testifying in court, Google’s Head of Global Partnerships, Don Harrison, confirmed that Spotify paid a 0 per cent commission when users opted for subscriptions through Spotify’s own system.

However, if users chose Google as their payment processor, Spotify paid a reduced 4 per cent commission, significantly less than Google’s standard 15 per cent fee.

Google had initially sought to keep the details of the Spotify deal confidential, arguing that disclosure could impact negotiations with other app developers seeking more favourable rates.

Google’s User Choice Billing program, introduced in 2022, typically reduces the Play Store commission by around 4 per cent if developers use their own payment system, bringing the 15 per cent subscription service fee down to approximately 11 per cent.

This often results in minimal savings for developers, who are responsible for covering payment processing costs. In court, Google emphasized the program’s advantages in terms of flexibility rather than cost savings.

Don Harrison justified the special arrangement with Spotify, citing the music streaming service’s “unprecedented” popularity and the need for seamless integration with Android services. He testified, “If we don’t have Spotify working properly across Play services and core services, people will not buy Android phones.”

As part of the deal, both companies committed $50 million each to a “success fund.”

Google acknowledged Harrison’s testimony, stating that a “small number of developers” investing more directly in Android and Play may negotiate different service fees as part of broader partnerships.

The company emphasized that these partnerships involve substantial financial investments and product integrations across various form factors, contributing to an improved experience for users and creating opportunities for developers.

While Netflix was revealed to have been offered a discounted 10 per cent rate by Google (which it declined), Spotify’s unique deal highlights a distinctive approach to circumventing the in-app purchase fees.

In 2023, Spotify ceased support for Apple’s App Store billing system to avoid the up to 30 per cent commission, aligning with its historical grievances against in-app purchase fees. Unlike Epic, which continues its legal battle against both Apple and Google, Spotify appears to have found a less contentious and more cost-effective resolution with Google.