Secret Deal With Google Allows Spotify to Completely Bypass Play Store Payment Fees

Adi Robertson and Sean Hollister, reporting for The Verge three weeks ago:

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. [...]

But 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.”

When this was first reported last month, I installed Spotify on my Pixel phone and tried it myself. Not only does Spotify on Android default to using its own in-app purchasing system — giving not a penny to Google in fees, apparently — but I couldn’t even find a way to choose to pay using the Play Store system. Google has granted Spotify a complete exemption to any sort of payment fee, and Spotify simply uses its own in-app payment processing.

On iOS, needless to say, Spotify has no such exemption. I just checked, and all Spotify does on iOS is list the features of each Premium account tier, with a message under each tier that reads “You can’t upgrade to Premium in the app. We know, it’s not ideal.” They don’t even list the prices or tell you where to go to sign up.

So I don’t really buy the argument that Spotify’s “unprecedented” popularity forced Google to offer this secret sweetheart deal. It doesn’t even make sense. Harrison’s argument is that Google had to offer Spotify this complete exemption from the regular Play Store payment processing rules because otherwise ... Spotify would have to do the same thing on Android that they do on iOS? It beggars belief that Spotify would pull its app from the Play Store. What makes more sense is that Google wanted to get Spotify — an EU-based company — off their backs as vocal critics of their app store policies, so they offered them this sweetheart deal to shut them up. But it sounds like these sweetheart deals, offered only to large companies like Spotify, are part of what led the jury to rule in Epic’s favor in the Epic v. Google lawsuit.

Monday, 11 December 2023