Netflix declines in-app payments for subscriptions to circumvent Google’s commission fees. The streaming giant, having rejected a discounted rate proposed by Google, opts to guide users to process payments through a web browser.
Have you ever wondered why subscribing to Netflix directly from the app isn’t an option? To renew or purchase a Netflix subscription, users must open the app in a web browser and complete the payment process there. This limitation stems from Google’s policy, which prohibits apps from offering in-app payments for subscriptions. In simpler terms, Google imposes a commission on all in-app purchases, a fee that Netflix is unwilling to pay.
During Google’s ongoing antitrust trial, documents and testimony revealed that in 2017, Google presented Netflix with a special discounted rate of 10% for its in-app payments on Android. This meant Netflix would retain 90% of the revenue. However, Netflix was reluctant to grant Google control over its payment mechanisms and revenue streams, leading to the decision to cease accepting payments via Google Play in May 2018.
A testified document, disclosed by The Verge, stated the deal offered to Netflix in September 2017: “Bring revshare to 10% on the condition that Netflix has a full commitment to GPB globally.” Netflix was reportedly the exclusive recipient of this offer at that time.
Netflix declined Google’s offer, opting to avoid paying for app distribution through Google Play. Consequently, Netflix guides users to subscribe and pay through a mobile web browser, allowing payments directly with a credit or debit card or through the iTunes or Apple App Store.
Netflix’s decision to circumvent Google’s fees is driven by concerns about potential losses, even at a 10% fee level. In the past, Netflix paid a 15% fee to Google for this service, but before Google terminated this arrangement, Netflix paid a fee closer to 3% when managing its own payment method. Google’s offer of a special 10% deal was an attempt to retain revenue before discontinuing alternative payment methods.
Regarding its iOS app, Netflix previously facilitated in-app payments using Apple’s system. Apple charged Netflix a 30% fee (or 15% for small developers) for apps selling subscriptions through the App Store’s payment system. However, in 2018, Netflix abandoned iTunes billing to avoid this commission. A subsequent iOS app update included an external subscription option directing users to the company’s website.
Netflix’s move to bypass App Store commission fees aligns with a broader trend among developers seeking to reduce reliance on app stores and regain control over their payment systems. Spotify, for example, also transitioned away from in-app payments amid a dispute with Apple over its commission rates.
