Introduction:
To circumvent Google’s Play Store commissions on in-app purchases, Match requested the ability to provide its consumers with an alternative to Google Billing. Last week, Google and Match struck a settlement in the app store antitrust lawsuit. Match-Google Antitrust Settlement Netted the Dating App Maker Over $300M option, which gives app developers a 4% discount when they use their payment systems (developers pay 11% or 26%, respectively, instead of the usual 15% or 30%).
However, it’s becoming evident from Match’s Q3 profits that the dating app developer settled for reasons other than a billing adjustment. Even though the facts of the agreement are classified, it looks like Match may have benefited financially from them—the arrangement was worth more than $300 million.
Adopting User Choice Billing alone isn’t particularly beneficial for app developers because, in many cases, more than the 4% price decrease is needed to balance the costs of running your payment processing, where rates can vary from 3% to 6%. Additionally, User Choice billing occasionally costs even more than Google Play billing and is only sometimes a less expensive option.
(In fact, since Google has been requesting to keep off portions of an exhibit that would describe its Spotify arrangement in the ongoing Epic-Google antitrust litigation, it is speculated that Google may have negotiated a unique deal with Spotify, an early adopter of User Choice Billing.)
He emphasized that, due to a modification Google made to its billing procedures, Google has been pursuing damages since October 2021 to cover the unpaid commissions (or Play Store service fees) that the dating app developer owed for the payments it processed outside of Google Play while the litigation was pending, it requested that Match set aside $40 million.
However, Google has pressed Match to increase the amount in escrow, claiming that the initial $40 million needed to be improved. It discovered that Match had revealed the additional $6 million monthly cost to implement Google Play Billing in its Q1 2022 earnings. At a rate of $6 million per month, Google would need to collect the “correct” amount of missed service fees from October 2021 through December 2023, totalling $162 million.
“As part of the settlement,…we basically agreed that we won’t owe any amounts before the end of this year, and so what that means is everything that we’ve been processing on credit cards for the last two-plus years there are no incremental fees owed,” Swidler said during the most recent Q3 earnings call.
This implies that Match not only keeps the $40 million placed in escrow but also avoids having to reimburse Google for the $162 million “real” amount of overpaid service fees (which would have included the $40 million already placed in escrow). That is a massive victory for Match.
However, there are other financial aspects of the settlement as well. Additionally, Swidler disclosed to investors that the agreement with Google included a “second piece of value.” By this, he meant the company’s more extensive collaboration with the internet behemoth, encompassing marketing, distribution, and cloud services.
Match-Google Antitrust Settlement Netted the Dating App:
Match-Google Antitrust Settlement Netted the Dating App (Image Source: techcrunch.com)
More specifically, this means that over 36 months, Google’s payment to Match will “offset” the cost of implementing User Choice Billing, which entails paying Google the necessary service and payment processing fees.
We need to be made aware of Match’s payment processing costs for the transactions it manages. Given that, as previously mentioned, the discount Google provides under User Choice Billing frequently falls short of covering payment processing fees, it may save a little money over Google Play Billing or spend a little more. Nevertheless, we can still estimate the size of this “offset” figure by using the previously released $6 million monthly figure. At $6 million a month for three years, that would come to $216 million over 36 months.
Therefore, Match, the provider of dating apps, received far over $300 million from Google in its settlement, even by modest estimates. That settled!
This begs the question: Given that this was the price of settling, why would Google do so? Is it possible that the decision was taken to concentrate solely on the ongoing antitrust dispute with Epic Games rather than giving Match the opportunity to present its case before the court?
What Google may have provided in its settlement with the collection of US states formerly parties to this antitrust action also piques our interest. Before the Match deal, the state attorneys general agreed to end their legal dispute with Google in September. Because a judge must still approve the final settlement, the terms of that agreement were not immediately made public, but they will eventually be. The settlement is confidential, so neither Match nor Google can publicly discuss it.
My name is Sai Sandhya, and I work as a senior SEO strategist for the content writing team. I enjoy creating case studies, articles on startups, and listicles.
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