have struck a deal that allows the streaming giant to offer its own billing service within its app, paving the way for other developers to fight app store billing scrutiny amid antitrust concerns .
) users who downloaded the app from the Google Play Store will soon have the option to pay through Spotify’s payment system or Google Play Billing.
“Spotify is on a multi-year journey to ensure app developers have the freedom to innovate and compete on a level playing field,” said Alex Norstrom, chief commercial officer of Spotify. “We’re excited to partner with Google to explore this approach to payment choice and the opportunities for developers, users, and the entire internet ecosystem.”
Google said the partnership with Spotify was a pilot project with a small number of participating developers, designed to explore ways to give users the choice to pay developers directly while maintaining Google’s “ability to invest in ecosystem”. The company plans to explore user billing choice in other selected countries.
The move was an “obvious antitrust concession regarding App Store fees,” according to Benchmark analyst Matthew Harrigan. Over the past year, Google’s parent company, Alphabet (
) have faced antitrust litigation over fees charged to developers by app stores.
Three dozen US states sued Google last July over its charges, prompting Google to cut its commission from 30% to 15% on recurring subscriptions. Congress is considering legislation that would target app stores, while the European Union is set to pass legislation that would force alternative payments.
South Korea has already enacted a law prohibiting carriers from requiring developers to use in-app purchase systems. In response, Google activated alternative billing systems, charging 11% for the service.
To avoid app store fees, Spotify did not allow users to sign up for premium services on the app. Instead, they had to sign up directly on the streaming services’ website. The new development could be positive for Spotify as it “reduces communication friction for users, especially since Android is the leading platform in many of Spotify’s fastest growing international markets,” wrote Harigan.
Spotify and Google have not disclosed whether – or how much – Spotify will have to pay Google for the integrated billing services. JP Morgan analysts Cory Carpenter and Doug Anmuth think Spotify pays a fee, but it could be lower than the currently established service fee.
If Google imposed lower fees, it could set a positive precedent for other app developers who have paid high fees to the Play Store, such as online dating apps.
), they said. Analysts say Google is more likely to end up reaching a uniform service fee, rather than making individual deals with specific apps.
It could also add pressure on Apple, which has retained a 30% service fee on subscriptions and does not allow alternative payments unless required by law, Carpenter and Anmuth added. Benchmark’s Harrigan doesn’t think Apple would immediately mirror Google’s concession, especially since it doesn’t strike deals with individual developers.
Spotify stock fell 0.2% on Thursday. Match rose 3% and Bumble 0.7%. Alphabet shares rose 1.3%.
Write to Sabrina Escobar at [email protected]