• TechCrunch, Wednesday, October 27, 2010 12:48 PM

Amid rumors that Apple is flirting with a Spotify acquisition, a source tells TechCrunch that Google came close to buying the streaming music service last year. "Google was going to pay nearly $1 billion for the service," reports TechCrunch.

"Ultimately the deal went sideways because Google was demanding that all label deals be grandfathered in ... And Spotify wanted a $800 million+ walk away fee if the deal faltered."

This all happened last year, around the time that Apple acquired music service Lala, according to TechCrunch's source. After the deal fell through, Google and UK-based Spotify reportedly tried to negotiate a deal to have Spotify pre-installed on all Android phones instead. Meanwhile, as TechCrunch notes, if a company like Spotify lands attractive deals with records label -- as it has in Europe -- those deals have to be renegotiated following an acquisiton. As a result, "It ends up making these companies largely un-buyable."

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