Spotify isn’t the only company that has negotiated with Google for special treatment. It was also done by Netflix. According to documents and testimony in the Epic v. Google trial, Google offered Netflix a special discount rate of 10 percent of its Android in-app payments. Normally, Google charges a 30% fee but they wanted to offer Netflix a better deal.
In 2017, Google told Netflix they could pay only 10% of their revenue to Google if users signed up for Netflix on Android devices using the Google Play Store. This meant Netflix would keep 90% of the money instead of the usual 70%. Google really wanted Netflix to use the Google Play Store because Netflix is so popular.
At the time, Netflix was paying Google 15% to let people sign up for Netflix inside the Netflix app on Android phones and tablets. But Netflix used to pay closer to 3% when they handled payments themselves instead of using Google Play. Then Google stopped letting Netflix do that.
Google called their new offer the “LRAP++” program to make Netflix a “platform development partner.” The document showed Google said “Netflix is the only one this is being offered to at this point.” They told Netflix all they had to do was agree to only use Google Play Store worldwide forever.
But Netflix decided not to take the deal. Even at 10%, Netflix calculated they might lose around $250 million in a year if everyone signed up for Netflix on Android through Google Play instead of other ways. Netflix thought people would be more likely to keep their subscription for 3 years if they signed up elsewhere.
So while Google offered Netflix a sweet deal, Netflix passed because they believed they could do better on their own. Netflix still isn’t available for signups inside the Android app today. Instead Netflix directs people to their mobile website to become members.
Google offered Netflix and other big companies special low rates because it helps Google make more money overall from all the smaller developers if the largest apps use their service too. But Netflix showed that big companies don’t always have to accept special deals, especially if they think they can do better on their own terms.
