Google has officially acknowledged entering into a unique agreement with Spotify, allowing the music streaming service to bypass the standard Play Store commission fee. This revelation came to light during the ongoing antitrust case between Epic and Google, disclosed by Google’s Head of Global Partnerships, Don Harrison.
As reported by The Verge, the terms of this arrangement stipulated that Spotify incurred a zero percent commission when users purchased Premium subscriptions through the company’s payment system. In contrast, if a user utilized Google’s payment system, Spotify was obligated to pay a 4 percent commission, significantly lower than Google’s usual 15 percent fee.
In response to inquiries from the trial judge regarding the Spotify deal, Google asserted that disclosing specific figures would negatively impact ongoing negotiations with other parties. Although Google confirmed the details provided by Harrison, the company sought to rationalize the arrangement by emphasizing that certain developers investing directly in the Android and Play Store ecosystem receive deals that reduce commission fees.
Harrison further disclosed that Google and Spotify had committed to jointly invest $50 million in a ‘success fund.’ He defended the special agreement by asserting that ensuring the proper functioning of Spotify across play services and core services was crucial for the success of Android phones.
Introduced the previous year, Google’s User Choice Billing program typically imposed a 15 percent commission on payments made through the Play Store. However, if developers opted for their payment platform, Google offered a 4 percent discount, lowering the commission to approximately 11 percent. Despite this, Google’s VP of Play Partnerships previously acknowledged that, regardless of developers choosing User Choice Billing, they ultimately paid the same amount.
When questioned about potential similar arrangements with other companies, Google declined to provide further details. Recent revelations indicated that Google had proposed a 10 percent discount to Netflix, which the video streaming platform declined. Consequently, Netflix users are unable to purchase memberships through Android devices.
Spotify has consistently voiced concerns about in-app purchase fees. In the middle of 2023, the platform took a significant step by discontinuing support for Apple’s App Store billing system, aiming to evade the imposition of a commission as high as 30 percent. Spotify emerged as a prominent participant in the Coalition for App Fairness, a collective that included Epic, and endorsed the antitrust lawsuit initiated by the Fortnite publisher against both Apple and Google. However, in contrast to Epic’s sustained legal pursuit against both tech giants, Spotify seems to have identified a more straightforward and cost-effective resolution to disengage from the legal dispute with Google.
Epic, the developer behind the widely popular mobile game Fortnite, has initiated legal proceedings against Google, alleging that the search giant engages in unlawful price gouging by imposing commissions ranging from 15% to 30% on in-app digital transactions, according to a report by AP.
In the ongoing antitrust trial, Tim Sweeney, the CEO of Fortnite, testified, asserting that Google Play Store policies are illegitimate and contribute to Google’s monopoly in the mobile app distribution sector, as reported by Bloomberg. Sweeney claimed that Google attempted to sway Epic into releasing Fortnite through the Play Store by presenting a set of financial incentives during a meeting at the California office in 2018. Epic, however, rejected these offers, as stated by AP.
During his testimony, Sweeney expressed his perception of the situation, stating, “It seemed like a crooked arrangement… Google was proposing a series of side deals, which seemed designed to convince Epic not to compete against them.”
Does Google Favor Big Tech Companies with Lower Commission Fees?
Google’s revelation of a unique payment arrangement with Spotify has shed light on the company’s practice of selectively negotiating lower commission fees with certain developers. While Google justifies these deals by emphasizing the investments developers make in the Android ecosystem, critics argue that they create an unfair playing field and disadvantage smaller developers.
The Spotify deal is particularly controversial given that the company is a member of the Coalition for App Fairness, which is advocating for stricter antitrust regulations against Apple and Google. Spotify’s willingness to engage in a secret deal with Google suggests that the company may be more interested in protecting its interests than promoting fairness in the app market.
The Epic lawsuit against Google is likely to continue, and the revelations about the Spotify deal could give Epic more ammunition to argue that Google is abusing its monopoly power. It remains to be seen whether Google will be forced to change its policies and allow all developers to pay lower commission fees.
On 20th August 2021, Epic Games finally revealed details about its antitrust lawsuit against Google. The newly released court filings contained the nature of the allegations and the evidence to back them up. Epic filed a case not only against Google but Apple too for the same reasons.
The case against Apple finished its trails stages and are waiting to get a verdict from the federal judge, while the case against Google is going at a slow pace. Both Google and Apple had removed Fortnite from their app stores, which is what led to Epic filing a lawsuit against them. Fortnite currently has over 400 million registered players only from those two app stores.
According to the lawsuit, Epic claims that both Apple and Google are misusing their monopoly power to control or generate more profits. The main problem that Epic has with Google and Apple is over the excessive fees that the app stores of these companies are charging its app developers. So far, Epic has made multiple allegations against both Google and Apple, keep reading to find out what they are.
In July 2018, Epic Games received a partnership deal of over $208 million from Google executives for a period of three years, the gaming company also claimed that Google tried to offer a discounted fee of 25%, instead of its standard 30% cut it usually took from app developers, to give Epic Games an additional revenue share.
But the gaming company is said to have rejected this “custom offer” and choose to allow Fortnite downloads for android through Epic’s own website through a partnership with Samsung electronics. Another reason Epic Games trying to bypass Google Play Store and Apple app store is that they wanted to help their users in availing better deals and offers for in-game purchases in Fortnite on Epic’s own store.
After this happened, both Google and Apple removed Epic’s Fortnite gaming app from their app stores which led to Epic filing a lawsuit against Google. Both Google and Apple app stores are known to charge 30% fees for all the in-app purchases for games, which is their main source of revenue, especially for gaming app developers. Epic wants to charges their user’s only a 12% fee, but both the conglomerates have blocked the gaming company from getting its store on their platform.
Epic also added that the 30% fee is over 10 times more than what payment platforms like PayPal and Stripe offer, which is only 2.9%. The Gaming Company is said to be expecting relief from Google and Apple monopolistic practices and is not looking to gain any monetary relief through this lawsuit.
According to Epic Games, Google has made many attempts to make big smartphone companies like Samsung and One plus not preinstall the Epic Games store. The lawsuit says that Google apparently created Project Hug in order to give benefits or deals to gaming companies like Activision Blizzard that support Google Cloud and YouTube.
It also added that Google is offering side deals like YouTube sponsorships and cloud services to companies like Activision Blizzard through Project Hug. The company also claims that Google made attempts to buy shares of Epic Games through a major shareholder Tencent so they can shut down competition from the gaming company. Epic also stated that Google has added many unnecessary extra steps to prevent users from purchasing directly out of Epic.
The allegation does not end there as Epic also claims that Android is not open-source as it claims and has made deals with Google that prevent smartphone manufacturing companies from offering other app stores without restrictions. Moreover, the company also went on to say that both Google and Apple are working together even though they are competitors.
Epic’s lawyers added that “These deals allow Google to keep its monopolistic behaviour publicly unchallenged. But Epic is not interested in any side deals that might benefit Epic alone while leaving Google’s anti-competitive restraints intact; instead, Epic is focused on opening up the Android ecosystem for the benefit of all developers and consumers.”
Over 37 states and districts of the USA had filed a separate antitrust lawsuit against Google Play Store claiming that Google Play Store exercises a monopoly over application distribution. The attorney generals from these states claimed that the platform was cutting down the profits of app developers and taking a huge commission on the in-app sales.
This lawsuit also added that Google was using illicit measures in order to maintain its monopoly over app developers. Because of this, Google Play Store for the first time in 13 years disclosed its revenue on 30th August 2021.
According to the Google Play store, the total revenue of the platform was over $11.2 billion in 2019. This amount is said to include the price of the app, in-app purchases and the revenue generated through advertisements on the Play Store app.
Worldwide gross app revenue of Google Play
What is Google’s Response against these Allegations?
Google has already come out and called these allegations baseless and said that it is mischaracterized their business conversations. Google spokespersons also added that Android does provide more choices in smartphones for both app developers and its consumers. Google has not come out with their official statement yet, while Epic’s year-old lawsuit against the company is likely to be a threat to its app store.
What is the main reason behind the Epic lawsuit against Apple and Google?
The main reason Epic has filed a lawsuit with Google and Apple is over the excessive fees that the app stores of these companies are charging its app developers.
What is Epic Games?
Epic Games, Inc. is an American video game and software developer and publisher with its headquarters based in Cary, North Carolina.
Who is the founder of Epic Games?
Tim Sweeney and Mark Rein founded Epic Games on 15 January 1991.
Esports is a form of sport competition using video games which is often organized into multiplayer video games, particularly between professional players, individually or as team. Esports has managed to take over the market in India mainly because of the growth and promotion done on online streaming platform such as Youtube and Twitch. The word “esports” is getting increasingly popular by the day thanks to the multiplayer online games like PUBG and Fortnite.
The masses still don’t know that the esports industry is more than a decade old and has just shot up in India in the past few years with more developers and investors jumping into the sector. The most common video game genre of esports are multiplayer online battle arena (MOBA), first person shooter (FPS), fighting, card games, battle royale and real time strategy (RTS). The popular franchises include League of Legends, Dota and Counter strike.
Although the legitimacy of esports as a true sporting competition remains in question, they have been features alongside traditional sports in events such as Asian games, while even the International Olympic Committee are also discussing their inclusion into the future of Olympic events. In India esports accounted for around 4% of all online gaming users and 9.13% of aggregate revenue out of the overall online gaming market in FY20. The growth in esports prize money pool by 123.3% during 2016-2018 has attracted gaming enthusiasts to become professionals
According to Forbes, India ranks 16th, with a total revenue of $1.17 billion (8,000 crore approx.). Comparatively to, North America is estimated to generate revenues of almost $409 million in the next four years while China known to have largest gaming market in the world, with a total revenue of $37.9 billion (Rs 26.11 lakh crore approx.) in 2018, followed by US, Japan and Korea. This shows there is huge potential in the esports market and India needs to tap into that space.
In 2010, India only had 25 game developers whereas now we have 250 more joining the list every year. Corporate giants like Paytm, Alibaba, Tencent and even Nazara have been investing heavily in the Indian gaming market, which is currently one of the top 5 countries in terms of mobile gaming. Most of the revenue generated in esports is sponsored by companies like Asus, Oppo which have been funding to organize and promote esports competitions in India.
Popular esport events in India
Apart from the local tournaments like PUBG Mobile India Series 2019, for the first time, Mumbai is set to play host to one of the biggest esports gaming event, ESL (Electronic Sports League) which will see Dota 2 players from across the globe compete in the two-day tournament. According to a Forbes report, as of October 31st 2019, 285 players from India had earned $216,761.38 (Rs 1.49 crore) in various esports tournaments and games, ranking India at number 64.
Counter Strike remains the most popular and most played esports in India. Counter Strike was released in 2012. Since 2012 Counter Strike has been India’s most popular esports game. India was not a hub for esports back then. But now Indian esports are being recognized at an international level and getting international investments too. Counter Strike is a multiplayer first-person shooter which pits two teams against each other. Competitors are given the task of eliminating the other while completing separate objectives.
Dota 2
Dota 2 is one of the first esport that comes to mind while talking about India’s most popular esports games. Dota 2 is a multiplayer online battle arena. The two featured teams can have 5 players each. To win Dota 2, each team has to destroy the opposing structure while defending theirs. Players have more than 100 characters to choose from. Each character has unique abilities, playing styles, and attributes.
Esports Market During Covid-19
The paradigm shift in the way Indians consume content and the way people socialize online has acted as a catalyst for man attention economy sectors including online gaming. According to a report by Barc and Nielson the number of smartphone game users per week grew from 60% in pre Covid times to 68% during the lockdown. Similarly the mobile games per user spent went from 151 minutes before covid 19 to 218 minutes after the lockdown.
Esports has a huge potential in the Indian market because of the high youth population. The esport segment has online gaming has witnessed significant growth in India in the past few thanks to proliferation of high end smartphone at affordable prices, as well as the rise of mobile games such as PUBG mobile, Free Fire, Clash of Legends, call of duty Mobile among PC and Console games.
Along with deeper penetration for high speed 4G internet and a rise in the number of online gamers the esports market has all the ingredients for growth. The aggregate revenue of esports startups and companies in India reached $68 Million in FY2020 and is projected to grow by CAGR 36% in the next 3 years, as per Inc42 Plus analysis of 36 companies including Jetsynthesys, Nazara technologies, Usports, Gamerji among others.
India’s online gaming revenue growth to hit inflation point
Role of The Stakeholders
From e-commerce platforms like Flipkart to Asus, high end gaming hardware manufacture s like Asus as each platform play a major role in making sure that budding gamers and professional get the required accessory or hardware. According to Leon Yu, Regional Head for India and South Asia, ASUS, “most gamers these days demand LCDs, mobility of hardware and mostly importantly performance. We have also ensured that affordability and performance is catered to with our new series of ROG gaming laptops, which start at Rs 50,000.”
In terms of affordability and availability, ecommerce platform like flipkart and amazon make sure that customers get the products at a cheaper price. Looking at the market opportunity, even unicorns such as Paytm and Hike have doubled down on games. While Paytm launched Paytm First Games as a multi-game platform, Hike-backed WinZO has also been growing rapidly and has raised plenty of funding in the recent months.
Connectivity is quintessential for the growth of the gaming industry and telecom providers too have been working around the clock to not only provide users with affordable data plans, but also work towards make high-speed data accessible across India. According to Anurag Khurana, Head of Esports, Reliance Jio Infocomm Limited, “In terms of data availability, Reliance Jio has setup 3,00,000 mobile towers and spread around 3.5 million km of high-speed broadband cables across India in order to improve the connectivity because I feel low latency is key for online gaming.”
Currently there is not much scope for professional gamers in India as the infrastructure and the ecosystem is not ready to support a lucrative livelihood for many. According to Akshat Rathee, “choosing to be a gamer is a risky proposition in India as there is not much scope. However, there are other avenues one can explore in the gaming industry. People can choose a career in game commentary, choose to be an influencer where they can play games and talk about it, or a coder who can write code to build AI for games.”
Data handlers are also a good option where they can track data issues and then the biggest avenue is voice-over artistes as many developers will look to localize game content for Indian gamers. A career in esports or gaming in India can easily earn you anywhere from Rs 50,000 to Rs 2 lakh in a month. Since esports doesn’t require any extreme physical strength, it is a gender neutral space. Sasha Hostyn is one of the most successful women in professional esports and recently won the Intel Extreme Masters 2018 tournament, taking home $50,000 (Rs 34.45 lakh).
Rise in Esport Prize Money Pool
As indicated earlier, esports has seen rising participation from Indian players as the prize money across esports tournaments has been on an upward trajectory since 2016. The entry of PUBG Mobile in India was game changing moment as it provided gamers a career option. As per sensor tower data for July 2020, out of PUBG Mobile 734 Mn downloads globally, India was the ranked top in terms of downloads, with 175 Mn installs or 24% market share.
The growth rate of Esports prize money in India
Of course, much of this growth has been in recent years, whereas esports is already a multi-billion dollar business in the US and China. So relatively speaking, India has a long way to go in terms of revenue and income for players, despite outpacing China and the US in terms of downloads. To put in perspective, in 2019, esports tournaments in the US offered over $40 Mn in prize money, while India’s largest tournaments the PUBG Mobile India Series 2020 offered Rs 50 Lakh as total prize money.
Smartphone Penetration
Aside from the internet penetration and demographic fit, esports market in India has been driven by the proliferation of high performance smartphones and increasing presence of gaming related. The number of smartphone users in India grew at a CAGR of 15% during 2015 to 2020. The growing demand for digital services for information, entertainment and communication through apps such as Facebook, Whatsapp and YouTube have led to matured segment like esports.
Esport cafes are not only a way for people to play games without owning the requisite hardware, but this is where the competitive mentality is built through amateur tournaments. India is home to an estimated 350-plus such esports cafes with PC hardware giant NVIDIA announcing plans to expand its gaming footprint in India by adding 100 more cafes. Nemesis Gaming, League of Extraordinary Gamers (LXG) and Circle Gaming are few major esports cafe startups in India.
Rise in Startup Investments
The demand for competitive gaming rises in India, the esports and gaming segment is attracting adequate investor interests. Between 2014 and H1 2020, the total venture capital funding in Indian gaming startups was $448 Mn, according to Inc42 Plus. Among the gaming startups, the top-funded startups are Dream11 with $100 Mn in total funding, followed by Smaaash Entertainment with $82.6 Mn in funding and Nazara Technologies with $79 Mn.
Frequently Asked Questions
How to get into esports in India?
You need to pick one famous game and practice it well. Get as many wins as possible. The best thing to join esport is to join a league or play in an online tournament. The entry fees are very less. It gives you chance to play against high-level players.
Which are the best esports games in India?
Counter Strike, Dota 2, League of Legends, Overwatch are some of the best esports in India.
How esports organizations make money?
Esport organizations make money through content and tournament performance.
Does esports have a future in India?
Esports as an industry has unlimited scope in India. According to the Indian Federation of Sports Gaming, Esports will see rapid growth in the country and reach a cumulative revenue of up to ₹11,900 Crore.
PV Vyshnavi
