As part of the lawsuit against Epic, Google admitted that it charged certain applications, including Spotify, a significantly lower commission.
The Spotify application on Android // Source: Frandroid
On both Android and iOS, Google and Apple allow applications to pay for a subscription or purchase items within the applications themselves through their payment system, be it Apple Pay or Google Wallet. A service for which the two smartphone giants charge a high price.
In fact, applications on Android must pay Google 15% of the amount earned per payment. However, that is theory. In practice, some applications manage to conclude significantly cheaper contracts. This is particularly true for Spotify, as can be seen from the lawsuit between Google and Epic Games, as reported by the American site The Verge.
Don Harrison, head of global partnerships at Google, was called as a witness in the trial between Google and Epic Games – a trial aimed precisely at reducing the so-called “Google tax” – and indicated that Spotify had a preferential agreement with Mountain View have met company. Thanks to this agreement, Spotify will be able to keep 96% of the amount paid for each subscription paid through Google Wallet, while returning 4% to Google. A particularly advantageous tariff, since the Google Play Store Terms of Service stipulate that developers must pay 15% of the amount “for the automatic renewal of subscription products purchased by subscribers, regardless of the revenue generated by the developer each year”.
Google thus admitted to the American courts that it had reached a particularly advantageous agreement for Spotify due to the worldwide popularity of the music streaming service. Google therefore had two fears. Firstly, Spotify is not available on Android. Secondly, like the iPhone, the streaming platform only offers a subscription available on a website, without the option to subscribe through the Google Play Store.
An agreement that favors large applications
When asked by The Verge, a Google spokesperson confirmed the reasons for the agreement with Spotify in more detail:
A small number of developers investing more directly in Android and the Play Store may incur different service fees as part of a broader partnership that includes significant investments and product integrations in different ways. These important partnerships allow us to attract more users to Android and the Play Store by continually improving the experience for all our users and creating new opportunities for all developers.
However, it’s hard not to see this as a sign of favoritism towards a giant that is already a leader in its sector. Thanks to its position as a music streaming giant, Spotify benefits from an agreement that allows it to pay lower operating costs on the Google Play Store. In comparison, a smaller competitive player starting with much fewer resources would have to pay the 15% commission. While it will have a lot of work to do to develop before it reaches Spotify’s level, it will face much greater financial hurdles than the market leader.
This whole issue of anti-competitive practices is exactly at the heart of the trial between Google and Epic Games.
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