After Google confirmed yesterday that it gave Spotify a sweetheart deal on Android app store fees, we were curious if dating company Bumble or any of the other 80 or so developers that have joined Google’s “User Choice Billing” program were similarly given an alternative arrangement or other sweeteners.
Google spokesperson Dan Jackson would not answer our question.
Jackson confirmed that “the standard service fee the developer pays is reduced by 4 percent” with User Choice Billing, and he pointed us toward Bumble’s Q4 2022 earnings call, where CFO Anu Subramanian suggests to investors that Bumble, at least, did not have a special rate at the time:
Yeah, on User Choice Billing, you know, we don’t expect that to have any impact on margins. As you know, we will still end up paying in aggregate the 15 percent that we pay today to Google Play. The composition of that is just going to be different. So, from a margin perspective, we don’t expect that that will have any impact at all.
Court documents suggest that “different composition” involves developers still paying an effective 15 or 30 percent on the Android Play store because they’d have to spend the 4 percent they saved from Google on their own separate payment processor. Google VP of Play partnerships Purnima Kochikar admitted that developers would generally end up paying the same effective rate with or without User Choice Billing.
Bumble’s Q3 2023 earnings call suggests that, far from a Spotify-esque deal, it’s actually now paying higher app store fees:
As a percentage of revenue, cost of revenue was 29 percent versus 27 percent in the year-ago period, mostly due to higher App Store fees as a result of compliance with the Google Play mandate.
And yet: “I would say at the moment, we are quite positive on the impact on users,” Bumble’s president said about User Choice Billing on an earlier Q1 2023 earnings call.
So there must have been some reason why Bumble sticks with User Choice Billing, if it was either a wash or negative for the company’s margins!
The benefit might be enabling features Google doesn’t offer — we heard Google say in court today that User Choice Billing could let Bumble, for instance, offer one-day subscriptions to its dating apps. When Bumble lost those one-day subscriptions with its app Badoo as part of a forced move to Google Play Billing, VP of product revenue Richard Watts testified, it led to a drop in paying users. But without a clear answer from Google or any of the other parties involved, we can’t know if that’s the reason.
We also don’t know, and may never know, just how good a deal Spotify got. We first learned about the secret deal after Google argued that Epic should not be allowed to reveal the specific rates it allowed Spotify to pay in open court, lest other companies use them to get better deals, too. Judge Donato declined to decide either way on short notice.
Instead, he let Epic and Google work it out among themselves — and on Wednesday, while the jury saw Spotify’s “two numbers,” Epic didn’t speak them aloud.
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