What you need to know
- Spotify secured an unprecedented payment deal with Google, paying a mere 0% commission for in-app purchases made through its own system, as revealed during the Epic v. Google trial.
- For purchases made through Google's payment system, Spotify still enjoyed a reduced fee of 4%, significantly lower than Google's standard 15% cut.
- Spotify's popularity and influence on Android users served as the justification for Google's "bespoke" deal.
Spotify secured an unprecedented payment deal with Google, allowing the streaming platform to keep all the money from subscriptions made through its own payment system on Android devices.
Google's head of global partnerships, Don Harrison, revealed in a testimony during the Epic v. Google trial that Spotify paid a remarkable 0 percent commission for subscriptions via its system, The Verge reports. For purchases made through Google's billing system, Spotify only handed over 4 percent, a far cry from the standard 15 percent fee.
The search giant's User Choice Billing program, launched in 2022, slashes the Play Store commission by approximately 4 percent for developers who use their payment system. However, the cost savings often prove minimal, as developers bear the payment processing expenses.
Harrison defended Spotify's "bespoke" deal by pointing to its massive popularity and positive impact on the sales of Android phones and user experience across Google Play services.
Google backed Harrison's testimony, stating that it's all about a select group of developers making big moves on Android and Play. In a nutshell, these developers get different service fees as part of a broader partnership involving financial investments and product integrations across different devices.
According to Google, these investment partnerships are the company's way of improving the Android and Play experience for everyone and opening up fresh opportunities for all developers.
In a show of unity, both Spotify and Google committed $50 million to a "success fund" as part of the bespoke deal, underscoring the significance and mutual benefits envisioned in their arrangement.
Spotify once sided with Epic Games in its battle against Google and Apple's app store fees. However, in a surprising turn of events, Spotify jumped on board with Google's User Choice Billing program last year, allowing it to use its own payment system while still paying a reduced fee to Google. This special deal highlights Google's willingness to bend the rules for big-name apps like Spotify.
That said, the music streaming service has also been a strong opponent of high in-app purchase fees. It made a bold move earlier this year by completely ditching Apple's App Store billing system to avoid a hefty 30% cut.
