Google’s secret deal has allowed Spotify to completely bypass Google Play’s user fees

Music streaming service Spotify has struck a seemingly unique and very generous deal with Google to pay for Android subscriptions, it has been revealed in new testimony given during Epic’s lawsuit against Google. Speaking at the trial, Google’s head of global partnerships Don Harrison confirmed that Spotify paid 0% commission if users chose to buy subscriptions through Spotify’s own system. If users chose Google as their payment processor, Spotify only remitted 4% – significantly less than Google’s more common 15% commission.

During its antitrust battle with Epic, Google fought to keep Spotify’s figures secret, arguing that they could hurt negotiations with other app developers who might want the same rates. The Google User Choice Billing programme, launching in 2022, is generally described as reducing Google’s Play Store fees by about ONE per cent if developers use their own payment system, bringing Google’s 15 per cent subscription service fee down to about 11 per cent. As a result, developers often get little to no savings because they have to pay for payment processing themselves. And in court, Google cites benefits such as greater flexibility rather than cost savings.

However, Harrison argues that Spotify’s “unprecedented” popularity was big enough to justify a “customised” deal. “If Spotify doesn’t do well on Play and core services, people won’t buy Android phones,” Harrison said. As part of the deal, both parties also agreed to put $50 million each into a “success fund.”

In a statement to The Verge, Google acknowledged Harrison’s statements. “The small number of developers who invest directly in Android and Play can get a different value proposition as part of a broader partnership that includes significant financial investments and product integration across multiple form factors,” said company spokesman 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 creating new opportunities for all developers.”

Google did not name the other developers who got the company to agree to more generous rates. During the trial, we learned that Google also offered Netflix a special rate of just 10 per cent, but Netflix declined. Netflix no longer offers an in-app purchase option on Android and as a result no longer pays Google to distribute its app.

Spotify has often complained about app purchase fees before. In mid-2023, the company completely dropped support for Apple’s App Store billing system to avoid paying up to 30 per cent commission, and was one of the most prominent early members of the “Coalition for App Fairness”, which included Epic and supported the Fortnite publisher’s antitrust lawsuit against Apple and Google. But while Epic continues its legal battle with both sides, Spotify has apparently found an easier and much cheaper way out of its fight with Google.