Spotify's deal with Google lets it skip Play Store fees
What's the story
Google allegedly made a unique arrangement with Spotify, allowing the music streaming platform to avoid Play Store fees. The Verge reports that this deal lets Spotify pay zero commission to Google when users subscribe through Spotify's own payment system on Android devices. Moreover, if users subscribed via Google, Spotify only had to pay a 4% commission—significantly less than the standard 15% fee for subscriptions made via Google Play Store.
Details
Google and Spotify also agreed to a 'success fund'
Don Harrison, Google's Head of Partnerships, reportedly stated in court that, "Listening to music is one of [the phone's] core purposes... if we don't have Spotify working properly across Play services and core services, people will not buy Android phones." As part of this agreement, both Google and Spotify also apparently committed to investing $50 million each in a "success fund." This information surfaced during a lawsuit filed by Epic Games against Google, in 2020.
Lawsuit
Epic Games's lawsuit against Google
Epic—maker of Fortnite—accused Google's Play Store of being an illegal monopoly that compelled app creators to pay hefty fees for providing users with in-app purchases through the Play Store. Epic filed a similar lawsuit against Apple in 2021, which it lost. Initially, Spotify supported Epic Games in its battle against Apple and Google. However, in 2022, Spotify opted into Google's User Choice Billing program, allowing them to process payments through their own system while still paying reduced fees to Google.
Insights
Google's statement on investment partnerships
In response, Google spokesperson Dan Jackson told 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." Jackson added, "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."
Facts
Google's custom deal offer to Netflix
The Verge also reported that Google had proposed a custom deal to Netflix, offering a reduced commission of 10%. However, Netflix turned down the offer and opted not to allow users to sign up for its service directly within its Android app. Google has not disclosed the names of other developers who have managed to get more lenient commission rates.