Google admitted in court that Spotify does not pay Google Play Store fees thanks to a sweetheart deal it signed with the music streaming service.
As The Verge reports, this revelation was made by Google's head of global partnerships, Don Harrison, during the Epic vs. Google trial.
Typically, in-app subscription purchases made on Android devices require a 15% commission be paid to Google, but Spotify pays 0% if a user pays through Spotify's own system. Google gets 4% if a user instead chooses to use Google as the payment processor for the transaction. Separately, the two companies created a "success fund" and both paid $50 million into it.
As to why Google agreed to such a generous deal, Harrison explained, "If we don’t have Spotify working properly across Play services and core services, people will not buy Android phones."
Waving the fees is therefore viewed as worth it by Google because it believes Spotify helps sell phones, which ultimately leads to more commission being generated by new users buying apps and subscriptions.
When asked for comment by The Verge, Google spokesperson Dan Jackson said:
"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 ... 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."
Google was understandably very keen to stop the Spotify deal being made public as it could potentially (and probably will) have a negative impact on commission rate negotiations with other app developers and service providers.
Other Android music apps will no doubt be contacting their Google representative today.
