Photo Credit: Mitchell Luo
Last week Digital Music News reported on a ‘sweetheart deal’ between Google and Spotify. This week we get a peek at the terms of that deal—4% fees on payments processed with Google.
The details were revealed during the Epic v. Google trial, when Google’s Head of Global Partnerships Don Harrison confirmed the deal. Spotify paid 0% in commission to Google when users paid through Spotify’s payment system—and only 4% when users chose Google Play. That’s much less than the 15% that Google charges small-time app developers and much, much smaller than the 30% ‘Apple Tax’ as app store fees have been branded.
Google fought to keep these figures private during its antitrust battle with Epic Games. They suggested that knowledge of this sweetheart deal could damage negotiations for Google with other developers who may prefer paying 4% rather than 15%. Harrison notes that Google felt as though it needed to strike a ‘bespoke’ commission rate with Spotify to boost Android.
“If we don’t have Spotify working properly across Play services and core services, people will not buy Android phones,” Harrison testified according to The Verge. Google acknowledged the truth of that testimony in a statement.
“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,” adds 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 create new opportunities for all developers.”
While Spotify is clearly the recipient of one of these sweetheart deals, Google has refused to name other developers who received generous rates. Netflix was offered a rate of just 10%, but Netflix refused and no longer offers in-app purchases at all. Meanwhile, Spotify clearly used its position of power to argue for better fees from Google privately—and won that battle.