How Spotify skirted Android’s app store fees with a secret Google deal

In a surprising move, Spotify has reportedly struck a unique and exceptionally generous deal with Google in relation to Android-based payments, as revealed through new evidence in the ongoing Epic v. Google trial.

According to testimony, Google’s head of global partnerships, Don Harrison, confirmed that Spotify paid a 0 percent commission when users opted to purchase subscriptions via Spotify’s own system. However, if users chose Google as their payment processor, Spotify handed over just 4 percent—significantly less than Google’s more common 15 percent fee.

Google had fought to keep the Spotify numbers private during its antitrust dispute with Epic, citing potential harm to negotiations with other app developers who may seek more favorable rates. Google’s User Choice Billing program, launched in 2022, is known to reduce Google’s Play Store commission by about 4 percent if developers employ their own payment system, effectively bringing down Google’s 15 percent subscription service fee to around 11 percent. However, this often results in minimal or no cost savings for developers, as they are required to cover the expenses of payment processing.

However, Harrison justified Spotify’s “unprecedented” popularity as a compelling reason to implement a “bespoke” deal, emphasizing its significant impact on Android phone purchases and user experience across Play services. Both Spotify and Google also agreed to jointly commit $50 million to a “success fund” as part of the arrangement.

Google acknowledged Harrison’s testimony, stating that “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.”

Spotify has been vocal about in-app purchase fees, and in mid-2023, it completely removed support for Apple’s App Store billing system to avoid paying a steep 30 percent commission. Additionally, Spotify was among the notable early members of the Coalition for App Fairness, alongside Epic, in support of the antitrust lawsuit against Apple and Google. However, Spotify appears to have found a potentially easier and more economical resolution to the Google dispute.