How Google’s Sweetheart Deal with Netflix Saved them 90% on Google Play

Netflix, like Spotify, has engaged in negotiations with Google to secure special treatment. According to documents presented in the Epic v. Google trial, in 2017, Google offered Netflix a discounted rate of only 10 percent of its in-app payments on Android, allowing Netflix to retain 90 percent of the revenue. This move is significant as it comes at a time when the future of Google’s app store is being challenged by lawsuits from companies like Fortnite publisher Epic Games.

Netflix’s Vice President of business development, Paul Perryman, revealed that previously the company had agreed to pay Google a 15 percent cut when users subscribed to Netflix from inside the app. However, Netflix was offered an even better deal by Google to switch to Google Play Billing (GPB) under an initiative it called “LRAP++” – which Netflix would only receive. Netflix received a conditional offer from Google, promising to reduce the revenue share to 10 percent if Netflix committed to using GPB on a global scale.

Interestingly, Netflix turned down Google’s offer and no longer pays anything to Google for distributing its app via Google Play. Although this revenue model may seem unorthodox, it makes sense if one considers that Netflix projected a potential loss of around $250 million USD in one year, had they accepted Google’s offer and switched to GPB exclusively for in-app billing.

While the deal from Google was beneficial for Netflix, it is unknown how these negotiations might impact other developers, such as Spotify, who have likely also entered into similar agreements. This landscape has become all the more complex due to various legal battles Google is embroiled in with companies challenging the legality of these practices.

The intricacies of these legal proceedings exposed once again highlight the behemoth status of these tech companies and the complexities of their interactions with each other and with smaller developers. For now, these negotiations, deals, and ongoing legal battles will continue to shape how apps such as Netflix and Spotify operate within the mobile ecosystem.

Update, 11:12PM ET: Added Google comment.

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