Spotify Pays Reduced Fees on Android App Store Subscriptions, Google Exec Testifies
Written by djfrosty on November 22, 2023
While Google usually takes a 15% cut of customer payments for app subscriptions in its Play Store on Android devices, Spotify obtained a deal that allowed it to pay a drastically reduced commission, according to The Verge.
The details of the business arrangement were divulged by Google head of global partnerships Don Harrison on Monday (Nov. 20) in testimony during the Epic Games vs. Google trial: Spotify paid no commission if users bought subscriptions through Spotify, and 4% if users selected Google as their payment processor.
Harrison said in court that Spotify landed this “bespoke” agreement because “if we don’t have Spotify working properly across Play services and core services, people will not buy Android phones.” His testimony also indicated that the deal entailed a $50 million investment by both Google and Spotify in a “success fund.”
In a statement to The Verge, a Google spokesperson said that “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. 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.”
A rep for Spotify did not respond to Billboard’s request for comment.
Epic Games, which is known for furnishing the world with the popular game Fortnite, has been battling Google since way back in 2020 over the 30% fee the search giant charges app developers for purchases made on its Play Store on Android devices. Epic tried to circumvent Google’s system by putting its own payment system into the Fortnite app and charging a reduced price; Google hit back by yanking Fortnite off the Play Store.
Epic then sued Google. “Google… is using its size to do evil upon competitors, innovators, customers and users in a slew of markets it has grown to monopolize,” Epic wrote in its complaint. The New York Times reported that Epic’s CEO, Tim Sweeney, said in court on Monday (Nov. 20) that Google “exercises de facto control over the availability of apps on Android.”
Wilson White, a Google vp of public policy, told reporters earlier this month that “Epic wants all the benefits of Android and Google Play without having to pay for them,” according to The New York Times. “The lawsuit [from Epic] would upend a business model that has lowered prices and increased choices,” White argued.
Google had tried to avoid revealing the nature of its relationship with Spotify in court, The Verge reported earlier this month. “Disclosure of the Spotify deal would be very, very detrimental for the negotiation we’d be having with… other parties,” Google attorney Glenn Pomerantz told the judge overseeing the case.