Last week, a resolution was reached between Google and Match in the antitrust case involving app store practices. Match had sought the ability to provide users an alternative to Google Billing, aiming to circumvent Google’s Play Store commissions on in-app purchases. Although Match agreed to implement Google’s User Choice billing, offering a 4% discount on standard fees, recent revelations after Match’s Q3 earnings suggest that financial considerations played a significant role in the settlement, amounting to over $300 million.
Merely adopting User Choice Billing doesn’t inherently benefit app developers, as the 4% reduction may not cover the expenses of operating independent payment processing, with fees ranging from 3% to 6%. It is speculated that Google may have negotiated unique terms with early adopters like Spotify. In Match’s case, financial motivations appear paramount, as disclosed during the Q3 earnings call.
Google sought damages dating back to October 2021, requesting Match to escrow $40 million to cover unpaid commissions during the lawsuit. Subsequently, Google increased this amount, recognizing Match’s Q1 2022 disclosure that the cost of adopting Google Play Billing was $6 million monthly. The revised escrow figure aimed to recover the “correct” lost service fees until December 2023, totaling $162 million.
The settlement relieved Match from owing any amounts before the year’s end, ensuring it retained the initial $40 million in escrow. Additionally, Match avoided paying the actual total of lost service fees, a significant sum of $162 million. The financial aspects of the settlement extended beyond billing changes. Match’s CFO, Gary Swidler, mentioned a “second piece of value,” outlining a broader partnership with Google, covering distribution, marketing, and cloud services.
Swidler clarified that the benefits from this partnership would essentially neutralize the impact of implementing User Choice Billing in the years 2024, 2025, and 2026. Although specific details of Match’s payment processing fees were undisclosed, using the estimated $6 million per month over 36 months, the offsetting benefits from Google could amount to $216 million.
Even with conservative estimates, the settlement with Google appears to have financially favored Match, exceeding $300 million. The question arises as to why Google would settle at this cost, suggesting it may have prioritized focusing on the antitrust battle with Epic Games. The terms of Google’s settlement with U.S. states involved in the antitrust lawsuit remain undisclosed, awaiting court approval. Both Match and Google are bound by confidentiality regarding the settlement details.
