An intriguing piece of information has emerged from the Discovery phase of the Epic v. Google trial, which began earlier this month. As you may be aware, Epic is suing Google, arguing that the latter’s Play Store constitutes a monopoly. Google, like Apple, receives a cut of the money from in-app purchases. Originally set at the same 30% as the so-called Apple Tax, Google cut the “tax” on the first million dollars of revenue to 15% two years ago, reverting to 30% once that barrier was exceeded.
Epic opted to offer its V-bucks in-game cash for its smash hit Fortnite by avoiding Apple and Google’s in-app payment processes, thereby avoiding the fees that Apple and Google would have to pay. Both tech companies replied by removing Fortnite and Epic from their respective app stores. Epic mainly unsuccessfully sued Apple, and the game company now has its day in court against Google.
Epic was not the only company to express dissatisfaction with the payments they had to make to Apple and Google. Both Spotify and Netflix grumbled about the “commissions” they had to pay. Users of the Android app can no longer subscribe to Netflix. According to The Verge, a video deposition of Netflix VP of Business Development Paul Perryman in 2022 revealed that Netflix paid Google 15% of in-app subscription earnings before discontinuing it as a subscription option for users.
Perryman also stated that prior to Google removing Netflix’s ability to offer its own in-app payment processing, Netflix was only paying Google 3% of subscription income. Evidence presented in court yesterday included testimony indicating that before Google removed alternative kinds of subscription payment choices from Netflix, it offered the firm a special contract that reduced Google’s percentage of in-app revenue to 10%.
The reduction in Google’s percentage would be permitted if Netflix joined Google Play Billing (GPB) on its own. According to a Netflix document, Google offered to make Netflix a “platform development partner.” According to the document, Netflix was the only firm that offered this arrangement.
Under oath, Netflix executive Perryman stated that the September 2017 deal will “bring revshare to 10% on the condition that Netflix has a full commitment to GPB globally.” But Netflix declined because, even after paying 10%, the video streaming company expected to lose money. According to an internal paper from Netflix, “Assuming all Android in-app signups came through GPB, Netflix would lose ~$250M USD on 1 year of signups, even when accounting for the incremental uplift.”
Today, Netflix merely instructs Android customers who download the Netflix app to subscribe to the service through their mobile browsers. As a result, although Android users cannot join up straight from the app, it now pays Google 0% of its earnings. For Android users, it’s a minor annoyance that’s unlikely to deter most people from signing up for a subscription.
