We’re consolidating the technology platforms onto a single technology platform. We did a couple of the smaller bands last year. We’re going to do a couple of more brands this year, and then we’re going to do some of the bigger brands next year. So it’s a multiyear process. And the reason for that is, it has customer implications. And so you have to be cautious. It’s a complex and risky undertaking. And we want to do it right and not have any unexpected consequences. And so we’re working kind of very deliberately and very carefully to make all of that happen. When those consolidations take place, we do see significant cost savings from them. And so that’s where we really started to get the financial benefit. So as I mentioned, we got a little bit as a result of what we did last year.
We’ve got a little bit more as well we will do this year. And then the real benefits will accrue fully by 2026, where we’ll see all the benefits of having one single platform, and we’ll have reduced all of the various redundancies. I would estimate that there’s probably a 10-point margin improvement in the E&E business once all of those cost savings are fully included. So that’s a substantial amount of money on a business that is somewhere between $600 million and $700 million of revenue. And so that enables us to reinvest the savings into growth businesses around the company, whether that’s into Tinder, whether that’s at the Hinge or wherever we want to put it. That’s the plan once those savings are achieved. So this is a pretty significant undertaking for the company.
It gives us the ability to reinvest the dollars that are coming out as a result of the platform consolidations, and we’re working very hard and carefully to make all of that happen.
Operator: The next question comes from Ross Sandler with Barclays. Please go ahead.
Ross Sandler: Great. Thanks. Gary, can we go back to the App Store fees topic in the DMA? So it sounds like based on public statements anyway, that Spotify and Fortnite have very little interest in paying Apple anything for apps that are side loaded where there’s direct billing in that app at least in Europe. So would you guys fall into that camp? And is that $20 million that you called out just from the fee changes that have been announced assuming that you actually have to pay them for these changes? And then I guess the second question is, if Google, kind of, matches a similar fee structure and then this, kind of, becomes the global standard, what would that total number look like in some future state versus the $20 million you called out? Thanks a lot.
Gary Swidler: Yeah. So it’s one of the reasons why in answering Cory’s question, is it included or not, there’s still a lot of uncertainty around this. I think if you just do the straight calculation as we understand the policy changes that Apple put in place, you get to that $20 million number for a full year. But I think there’s still a lot of questions. As you point out, Spotify has raised questions and concerns. Microsoft has raised them. Others have raised them, and so you have to decide whether to opt into this or not. We have not yet done so. And so we’re still considering what this all means, which is why just kind of putting it into the guidance or not is not exactly the way this all works. And so we’re still looking at it, making sure we understand it.
And frankly, if you understand the dynamics of all this, this is what Apple has proposed complies with the Digital Markets Act in Europe. The European Commission actually has to accept that this proposal complies and that and of itself is far from assured. And so I think that will continue to play itself out over the next weeks or months as we get to that March 6th deadline. So we’ll see how this all plays out. From our perspective, the good news is that we expected the DMA to lead the changes on the App Store side, and we started to see that. And it’s hard for us to fathom that it will end there because even if the changes that Apple has proposed are what goes into place in the EU, if you’re a consumer in the US or you’re a consumer in the UK right next door to the EU, you start to wonder, well, why are customers in the EU getting benefit, and we’re not getting the same benefits.
And so if you’re the government in those jurisdictions, you’d say, well, our citizens deserve the same benefits as what we’re seeing in the European Union. And so that’s why in my remarks, I said we think it’s the first brick. I think there’s more to come. And just so you have an order of magnitude in your mind, we probably get five or six times the savings if the Apple changes as currently proposed were to be implemented in the rest of the world because while we have a relatively small percentage of our revenue in the European Union that comes from iOS, we’ve got a lot in the UK, we’ve got a lot in North America. And so there’s really significant benefits in those jurisdictions if these policy changes are made. So that’s where the significant benefits to us really would be, either further changes to the policies or expansions of the geographies.
And I think both of those things are very, very possible. The impact of further change on Google is not nearly as dramatic as the Apple side. I think that’s where we could see really meaningful steps forward. And we’re excited to see kind of where this goes because we’ve been waiting for this for a long time, and this is the first tangible movement that we’ve seen from the regulators. And as I mentioned in my remarks, that’s on top of some of the other things that have happened from a court perspective, which look like they’re going to open up the ability to use other app stores, which again is very significant for us or other processors for payments as well, which again is very significant for us. So, there’s a lot of moving pieces to this.
What we can quantify today is the $20 million based on the changes that have been made, but I think you have to think a little bit more broadly about what’s more likely to happen here over the next little while.
Operator: The next question comes from Brad Erickson with RBC. Please go ahead.
Brad Erickson: Yes. Thanks for squeezing me on. One of the questions we’ve been getting from investors a lot lately is just, given the impact you’ve seen on these pricing optimizations on Tinder, just curious if you’d ever consider any sort of like alternative path there on pricing in 2024, maybe rolling things back, et cetera, as a way to get payers back on earlier? And then maybe just to clarify as well, you talked about the RPP growth to Tinder, I think, looking out to the second half of the year. And it sounds like maybe AI could be having something to do with that. But then yes, you were pretty clear that like AI is not really in the forecast. Maybe if you could just reconcile that a bit. Thanks.
Gary Swidler: Yes. Look, I think that we look at all of these different levers all the time. But as we’ve talked about many times, we’re focused on increasing revenue, not specifically increasing revenue per payer or payers just for the sake of moving either of those KPIs. And so, we remain focused with our north star on revenue. But as we prioritize things, we have the ability to focus a little bit more on payers and potentially make some more impact there, because there’s always choices to be made on the product road map. So, we’re mindful of the fact that everyone is very focused on what’s going to happen with payers. We have enough in the road map to achieve the payer pivot in the third quarter as we described earlier and to get to payer growth in the fourth quarter.
So naturally, you would expect that over the course of the year, as the benefits of all the pricing optimizations and with subscribers start to subside, we’ll get to a better balance by the fourth quarter in terms of payer growth and RPP growth to equate to the revenue growth that we’re expecting in the fourth quarter. So, we will start to see this kind of normalize and become more balanced over the course of the year as things wash through. We’re not going to go to sort of abnormal efforts to drive payers because I don’t think that’s healthy for the business. But we are obviously cognizant of the various concerns around this. And I do think you will naturally see it become much more balanced as the year goes on.
Gary Swidler: All right. I want to thank everybody for joining us this morning. I think we’re right at time. We appreciate it, as always, and we look forward to seeing everyone again next quarter. Thank you so much.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
