Google supplied Netflix a sweetheart deal to pay simply 10 p.c on Google Play

Spotify is not the one one which negotiated with Google for particular therapy. Netflix did, too.

In 2017, Google supplied Netflix a particular discounted charge of 10 p.c of its in-app funds on Android — that means Netflix may preserve 90 p.c of the cash — in keeping with paperwork and testimony in the Epic v. Google trial.

At the moment, you may’t subscribe to Netflix from contained in the Netflix app on Android, however that wasn’t at all times the case. Netflix beforehand paid Google 15 p.c to do this, Netflix VP of enterprise improvement Paul Perryman mentioned in a 2022 video deposition that aired within the courtroom on Thursday.

As soon as upon a time, when Netflix may supply its personal technique of cost, it paid nearer to 3 p.c, he mentioned. Google finally minimize that off. However earlier than Google took different cost mechanisms away, it tried to supply Netflix the particular 10 p.c deal to change to Google Play Billing (GPB) voluntarily— reasonably than threat Netflix taking all of that income away.

Google supplied to make Netflix a “platform improvement associate” underneath a program it referred to as “LRAP++”, in keeping with a Netflix inner doc proven in court docket right this moment. (I consider I overheard that LRAP stands for Dwelling Room Accelerator Program.)

“Netflix is the one one that is being supplied to at this level,” the doc continued.

The deal: “Deliver revshare to 10% on the situation that Netflix have a full dedication to GPB globally.” Perryman confirmed underneath oath that Google really supplied that deal to Netflix in September 2017.

Netflix didn’t take the deal, he mentioned. Netflix not pays Google something for distribution by way of Google Play, pointing individuals who obtain the app to subscribe and pay in a cellular browser as a substitute.

That’s partly as a result of Netflix forecast it’d lose cash even at 10 p.c.

“Assuming all Android in-app signups got here via GPB, Netflix would lose ~$250M USD on 1 yr of signups, even when accounting for the incremental uplift,” reads a line in one other Netflix inner doc. (Netflix in contrast signing up in a browser vs. in-app Google Play funds, it provides, whereas assuming a subscriber would stick round for 36 months.)

“We don’t see a state of affairs the place Google’s cost system would outperform, and even match our personal,” Netflix argued.

Google’s lawyer didn’t contest any of this within the video deposition we noticed. As a substitute, Google spent its time confirming that Netflix is offered on virtually each video-playing gadget underneath the solar — successfully declaring, with out saying explicitly, that an app on the scale of Netflix can afford to bypass the shop and depend on a browser signup.

Google spokesperson Dan Jackson would not touch upon the Netflix supply particularly to The Verge, however advised it is regular for Google to supply totally different charges to totally different builders, saying “it’s no secret that Google Play gives a spread of charges that consider the various wants of our developer ecosystem or economics of various industries or app verticals, like streaming video.” He added that Google’s 2021 Play Media Expertise Program (launched after Epic’s lawsuit) has charges the place apps providing video, music, books, and apps “will pay as little as 10%.”

Whereas Netflix didn’t take Google’s sweetheart deal, it did take one from Apple again within the day. Netflix had a “distinctive association” with Apple to share solely 15 p.c of its income on iOS, half of Apple’s commonplace charge, in keeping with an electronic mail unearthed throughout the Epic v. Apple trial.

We don’t know the way a lot Spotify pays Google for its particular deal. Ultimately, the numbers weren’t publicly revealed throughout trial.

Replace, 11:12PM ET: Added Google remark.