Spotify (SPOT) Stock Gains After Google (GOOGL) Allows Third-Party Billing Option

Google (NASDAQ: GOOGL) will allow Spotify’s (NYSE: SPOT) users to pay the subscription fee directly through the Spotify app, the two companies said in a statement on Wednesday.

The announcement marks a significant privilege for Spotify as major mobile app stores rarely enable third-party billing systems inside apps.

Spotify stock price surged roughly 3.5% on the news.

In the past, two of the biggest mobile app stores including Google Play and Apple’s App Store did not allow developers to directly charge their customers for their services but rather were required to solicit customers’ credit cards through Google’s system, which charges from 15% to 30% of total sales.

However, that may now change. Google said allowing Spotify to provide its own billing is a “pilot” but did not offer any details about when or in which countries the feature be available to other app makers. The tech giant said it will allow only a “small number” of developers to provide their own billing for now.

“This pilot will allow a small number of participating developers to offer an additional billing option next to Google Play’s billing system and is designed to help us explore ways to offer this choice to users, while maintaining our ability to invest in the ecosystem,” Google wrote in a blog post.

Google will still charge Spotify a fee for processing the payments on its own, and said it plans to expand the policy it uses in South Korea where it charges an 11% fee on subscription purchases handled through a third-party billing system, demanded by the new South Korean legislation.

By Senad Karaahmetovic

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