Details from the trial of Epic Games and Apple continue to emerge. This time they are about Google. It turned out that the company was thinking about buying Fortnite authors with the help of Tencent. She also paid smartphone manufacturers to abandon third-party marketplaces and gave at least “hundreds of millions of dollars” to popular developers so that they would not leave the Play Store.
Since yesterday, court documents have been published in unedited form. Previously, some of the information in them was closed, and only the judges could see it. New information appeared just from such disclosed files.
Google talks with Tencent
Google’s plans for partial or full purchase of Epic Games became known two weeks ago. On August 6, a more detailed version of Epic Games’ antitrust lawsuit against Google appeared on the web (recall that developers are suing not only Apple, but also Google). But the fact that Tencent also appears in these plans was not disclosed at that time.
As stated in the document, Google did not like that Epic Games was looking for ways to bypass the Play Store commission in Fortnite. She called these ideas “a company-threatening contagion.” The absorption of Epic Games could help to avoid the “infection”.
But Google was afraid that the developer would not make a deal. As an alternative, one of the corporation’s executives suggested turning to Tencent, which owns 40% of the shares of Epic Games. He said that Google could either buy out a stake from Tencent, or team up with the Chinese giant to buy 100% of Epic Games.
This information was commented by the head of Epic Games Tim Sweeney (Tim Sweeney). According to him, he did not know about Google’s intentions until the recent disclosure of court documents.
It appears, sadly, that Google was indeed contemplating a coordinated, multinational hostile takeover attempt of Epic in response to Fortnite launching outside of Google Play.https://t.co/yJ2dTzis7D
— Tim Sweeney (@TimSweeneyEpic) August 19, 2021
In a statement to Protocol, a Google spokesperson called Epic Games’ lawsuit “baseless” and misinterpreting the company’s business conversations.
Payments to smartphone manufacturers
According to other disclosed details of the lawsuit, Google launched the Premier Device Program initiative in 2019. Within its framework, smartphone manufacturers can count on additional payments if they refuse to pre-install other stores. In particular, companies should not download apps to phones with the rights to install APK files without Google’s consent.
Participants of the program began to receive 12% of revenue from advertising in the Google search engine, and not 8%, as it was before. In addition, Google offered companies like Motorola and LG 3-6% of how much their smartphone owners spent on the Play Store.
Many companies have agreed to the deal. For example, Motorola did not pre-install third-party stores on 98% of its devices. LG — by 95%, and the Chinese conglomerate BBK, which owns the Oppo, Vivo and OnePlus brands— – by 70%. Sony and Xiaomi didn’t dive into the program so much, but they also made the Play Store the only marketplace for 50% and 40% of devices, respectively.
In the lawsuit, Epic Games noted that the Premier Device Program was not publicly mentioned before the proceedings began. According to the company, Google banned smartphone manufacturers from disclosing details of the agreement with Google and generally sought to hide “the most anticompetitive measures”
Payments to developers
Google also tried to negotiate with the largest Android developers. She was worried that developers might start following Epic Games to launch their games outside the Play Store. The company estimates that it will lose about $6-11 billion because of this.
Therefore, Google has launched a Project Hug program designed to keep developers in the store. Epic Games’ lawsuit does not specify exactly how much the company spent, but it was at least “several hundred million dollars” for 20 developers. It is known that Activision Blizzard was among the participants of the program.
On Twitter, Tim Sweeney clarified that Google had reduced the commission for developers by 5%, but financially described these deals as discounts on YouTube or cloud services.
Then there's Google's secret "Project Hug" to pay off publishers to not compete with Google Play by rebating 5% of store fees – but financially characterizing the transactions as YouTube deals, cloud service discounts, etc. Shady stuff.https://t.co/IKyTf3YpZk
— Tim Sweeney (@TimSweeneyEpic) August 19, 2021
A Google representative in a statement to The Verge stressed that such programs are standard practice for the industry. They are a sign of healthy competition between platforms and benefit developers.