Why Netflix doesn't allow in-app payments for subscriptions on Android
What's the story
In the ongoing Epic vs Google trial, it was revealed that Google proposed a special discount on in-app payments for Netflix on Android back in 2017.
This arrangement, known as "LRAP++," allowed Netflix to retain 90% of the revenue, with Netflix being the sole company that was offered this deal.
Despite this, the firm declined the offer and now bypasses Google Play for subscriptions, directing users to subscribe and pay via a mobile browser.
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Google eventually eliminated alternative payment options: Netflix
In a 2022 video deposition that aired in the courtroom this week, Netflix's VP of business development, Paul Perryman, disclosed that the company used to pay Google a 15% fee for in-app subscriptions on Android.
At one point, when Netflix provided its own payment method, the fee was closer to 3%.
However, Google eventually eliminated alternative payment options and attempted to entice Netflix with the exclusive 10% deal to voluntarily adopt Google Play Billing (GPB).
Details
Epic vs Google trial might shed light on various deals
Epic Games, the creator of Fortnite, filed a lawsuit against Google in 2020, alleging that the Google Play Store on Android devices constituted an illegal monopoly.
Google counters that Epic's demands would undermine Android's ability to provide a secure user experience and compete with Apple's iOS.
The outcome of this lawsuit could significantly impact Google's app store, shedding light on various deals and negotiations between Google and other companies like Netflix and Spotify.
What else?
Google offers varying rates to different developers
According to statements from Google spokesperson Dan Jackson, it's a common practice for Google to provide varying rates to different developers.
Jackson explains that Google Play employs a flexible fee structure that considers diverse requirements of the developer ecosystem and the economic dynamics of various industries or app verticals.
Moreover, Jackson elaborates that Google's 2021 Play Media Experience Program, introduced in response to Epic's lawsuit, includes rates that allow apps providing video, music, etc. to pay as little as 10%.
Insights
Netflix agreed on paying 15% revenue to Apple
Netflix turned down Google's 10% offer, partly because it anticipated losing money even at that rate.
An internal Netflix document stated, "Assuming all Android in-app signups came through GPB, Netflix would lose ~$250M USD on 1 year of signups."
The company contended that it couldn't envision a situation where Google's payment system would surpass or equal its own.
Interestingly, Netflix had previously agreed to a "unique arrangement" with Apple, sharing 15% of its revenue on iOS—half of Apple's standard rate.