A secret deal let Spotify bypass Android's app store fees

Original Article ↗ Hacker News Discussion ↗

Revelations that Google gave Spotify a secret deal to bypass most Android Play Store fees, reportedly paying 0–4% instead of the standard ~15–30%, have reignited criticism of mobile app-store economics. Commenters argue this undercuts smaller developers who pay full commission, strengthens antitrust cases by showing “platform discrimination,” and exposes how dominant gatekeepers use opaque, selective terms to keep key apps on their platforms. The debate widens into whether percentage-based app-store fees are justified at all, how they compare to traditional payment processing and retail margins, and whether regulators should force Apple and Google to open their ecosystems or even break them up.

Scope of the secret deal

  • Google reportedly gave Spotify a 0–4% Play Store commission instead of the standard 15–30%.
  • Many see this as blatant platform discrimination: direct competitors (e.g., other music services) and small developers pay list rates with no access to similar terms.
  • Some speculate the deal may be tied to large GCP commitments and to keeping Spotify from pushing antitrust complaints or leaving Play altogether.
  • Others argue this is normal B2B behavior: large, strategic customers almost always get custom pricing.

Antitrust, monopoly, and fairness

  • A major thread: is this illegal price discrimination or just volume discounting?
    • One side: with Google/Apple effectively a duopoly and Google striking OEM deals to keep Play as the default, “secret” terms become anti‑competitive and violate free‑market assumptions.
    • Other side: price discrimination itself isn’t illegal; big customers getting better deals is how economies of scale and lower risk are rewarded.
  • EU’s Digital Markets Act is cited as a framework that will force alternative stores and side‑loading, even if fees stay high.
  • Several commenters call for breaking up or structurally separating big tech (OS, store, cloud, content) rather than merely regulating them.

Comparison to Apple and other “sweetheart” deals

  • Apple’s 30%/15% structure is heavily criticized, but some note Apple claims (via Epic trial) it doesn’t privately discount App Store fees, while others point to leaked deals (e.g., Amazon Prime Video) as counter‑evidence.
  • Apple’s lack of alternative stores is framed as making its conduct different: Apple doesn’t need to cut deals to keep apps on iOS, whereas Google does to defend Play’s centrality on Android.

Economics of app store fees

  • Many argue 30% (or even 15%) is far above actual payment processing cost (~2–3%), so most of the fee is “monopoly rent” for access to users.
  • Defenders say the fee pays for more than payments: OS development, store infrastructure, discovery, fraud handling, and access to a massive audience.
  • There is concern that percentage‑based fees especially distort low‑margin businesses (like music streaming) while favoring “sell-air” IAP models.

Impact on Spotify, rivals, and small developers

  • Spotify’s thin/negative margins and ~80% revenue payouts to rightsholders make standard app‑store cuts particularly painful; the special rate may be existential for them.
  • Competitors and indie apps can’t access these terms and may never know they exist, which commenters describe as “hardcoded inequality.”
  • Some see Spotify as a serial negotiator of sweetheart deals (with platforms, labels, Sony/PlayStation), turning deal‑making itself into a competitive moat.