Google Made an offer to Netflix to Reduce the Cost of The App, But the Company Would Have Still Lost Money

The ongoing legal battle between Epic Games and Alphabet Inc. has shed light on the special treatment that large developers receive from Google in the Play Store. The process has unearthed some surprising facts about how Google offers incentives and lower app fees to keep significant players on its platform.

Google’s Offers to Large Developers

In a bid to secure the launch of their games on the Play Store, Google reportedly offered Activision Blizzard $360 million in ad credits and co-marketing. This revelation indicates that other major developers have also received preferential treatment.

Sweetheart Deals for Spotify and Netflix

The Verge reports that Spotify and Netflix have both received what it calls “sweetheart” deals from Google. Under the User Choice Billing program, Spotify has been given a special arrangement for Android app store fees.

On the other hand, Netflix was offered a deal back in 2017 that would have seen the streaming giant pay only 10% of its in-app payments revenue to Google, in contrast to the usual 30% rate. However, Netflix declined the offer, citing an internal document that forecasted continued losses even at the discounted rate.

Netflix’s Decision

According to The Verge, Netflix determined that even with the particular 10% deal, it would still lose money. The internal document from Netflix revealed that the company projected a loss of approximately USD 250 million on one year of signups, even when factoring in the incremental uplift.

Implications for the Tech Industry

These revelations from the Epic Games vs. Alphabet Inc. legal battle have questioned the fairness of Google’s treatment of large developers. The process has raised concerns about the transparency and equity of app store rules and policies, particularly in light of the special deals offered to certain companies.

The ongoing legal battle has provided valuable insight into how Google operates the Play Store and its strategies to retain significant developers. The revelations about preferential treatment and sweetheart deals raise essential questions for the tech industry and may prompt a reexamination of app store practices. Stay tuned for further developments as this legal battle continues to unfold.

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