Spotify Allowed to Sidestep Play Store Fees as Part of Confidential Deal, Google Executive Says

Google receives a substantially lower commission when Spotify's customers choose to make purchases using the search giant's in-app billing service.

Written by David Delima | Updated: 21 November 2023 21:00 IST

Spotify Allowed to Sidestep Play Store Fees as Part of Confidential Deal, Google Executive Says

Photo Credit: Pexels/ Danish Saifi

Spotify pays Google a 4 percent commission — only when customers opt for Google's in-app billing

Highlights

Spotify was granted a rare exemption from Google's Play Store fees
App publishers must pay Google up to 15 percent of purchases
The details of Google's deal emerged during the Epic vs Google trial

Google allowed Spotify to sidestep the company's mandatory Play Store fees, a company executive reportedly confirmed while giving testimony during the ongoing Epic vs Google trial. The Verge reports that a confidential deal with the streaming giant has come to light, revealing that Spotify was allowed to process its own payments on the service without paying Google a commission. The search giant previously sought to protect the details of its deal with Spotify under wraps during the ongoing case with Fortnite maker Epic Games.

According to the report, Google's head of partnership Don Harrison testified during the ongoing Epic vs Google trial that Spotify did not pay the company any fees when it processed customer payments on its own. If customers chose to pay Spotify via Google's in-app billing service, the platform paid Google a 4 percent commission.

Google charges most publishers on its platform a 15 percent cut of all app purchases and in-app purchases, but this figure can be lowered in South Korea, India, and 35 other countries where the company offers developers an alternative — user choice billing — that reduces the commission by 4 percent.

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The report states that aside from the music streaming platform's popularity on Android, the Google executive also testified that the search giant and Spotify had agreed to a "success fund" that would see each firm commit $50 million (roughly Rs. 410 crore).

It is worth noting that while Spotify might be receiving special treatment from Google, the company is still liable to pay the in-app purchase commission — that can go up to 30 percent of each transaction — on Apple's App Store. Like Netflix and many other services, the streaming service doesn't allow users to purchase a subscription via the Spotify app on iOS.

It's too early to tell whether these revelations will have an impact on Epic Games' case against Google. The game publisher sued both Apple and Google over their alleged antitrust practices that include preventing the use of alternative billing systems and alternative app stores on iOS and Android, respectively. The trial has revealed a lot of interesting details about Google and other firms — including a multibillion-dollar deal with Samsung to have the Play Store, Assistant, and Search apps as defaults on Galaxy smartphones.

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The Epic vs Apple trial ended earlier this year when the Ninth Circuit Court affirmed a 2021 decision that found the iPhone maker's ban on competing app stores on iOS did not violate US antitrust law. Apple lost only one claim in the trial — the firm would have to allow developers to allow links to external payment systems inside their apps. Epic has appealed the verdict at the US Supreme Court, while Apple has asked the court to strike down the ninth circuit court's order blocking its anti-steering rules.

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Further reading: Google, Epic Games, Spotify, Epic vs Google, Antitrust, Play Store, Google Play, Google Play store

David Delima

Email David Delima

As a writer on technology with Gadgets 360, David Delima is interested in open-source technology, cybersecurity, consumer privacy, and loves to read and write about how the Internet works. David can be contacted via email at DavidD@ndtv.com, on Twitter at @DxDavey, and Mastodon at mstdn.social/@delima. More