Epic Games’ objections to Google’s business practices became clearer on Thursday with the release of previously redacted accusations in the gaming giant’s lawsuit against the internet goliath.
Those accusations included details of a Google-run operation dubbed Project Hug that aimed to sling hundreds of millions of dollars at developers to get them to remain within Google Play; and a so-called Premiere Device Program that gave device makers extra cash if they ensured users could only get their apps from the Play store, locking out third-party marketplaces and incentivizing manufacturers not to create their own software souks.
A year ago, Epic filed a complaint against Google, following a similar complaint against Apple, alleging that the Android overlord violated antitrust law by removing its Fortnite game from the Google Play store.
Google did so because Epic violated its store rules by implementing a way to purchase in-game currency without using Google’s payment system, thereby denying the Chocolate Factory its chosen share of revenue.
As part of the litigation, Epic made some accusations under seal last month [PDF] because Google’s attorneys designated the allegations confidential, based on Google’s habit of keeping business arrangements secret.
But on Wednesday, Judge James Donato issued an order disagreeing with Google’s rationale and directing the redacted material to be made public.
“Google did not demonstrate how the unredacted complaints might cause it commercial harm, and permitting sealing on the basis of a party’s internal practices would leave the fox guarding the hen house,” the judge wrote [PDF].
The unredacted details, highlighted in a separate redlined filing [PDF] and incorporated into an amended complaint filed on Friday [PDF], suggest Google has gone to great lengths to discourage competing app stores and to keep developers from making waves.
For example, the documents explain how Google employs revenue-sharing and licensing agreements with Android partners (OEMs) to maintain Google Play as the dominant app store. One filing describes “Anti-Fragmentation Agreements” that prevent partners from modifying the Android operating system to offer app downloads in a way that competes with Google Play.
“Google’s documents show that it pushes OEMs into making Google Play the exclusive app store on the OEMs’ devices through a series of coercive carrots and sticks, including by offering significant financial incentives to those that do so, and withholding those benefits from those that do not,” the redlined complaint says .
Google’s documents show that it pushes OEMs into making Google Play the exclusive app store on the OEMs’ devices through a series of coercive carrots and sticks
These agreements allegedly included the Premiere Device Program, launched in 2019, to give OEMs financial incentives like 4 per cent, or more, of Google Search revenues and 3-6 per cent of Google Play spending on their devices in return for ensuring Google exclusivity and the lack of apps with APK install rights.
The filing also cites internal Google documents that the company’s Finance Director for Platforms and Ecosystems prepared for the CFO of Alphabet in advance of Fortnite’s Android launch that outline the “contagion risk” of developers giving up on Google Play.
“Google calculated the total at-risk revenue from the threatened loss of market share in Android app distribution to be $3.6bn, with the probability-weighted loss ‘conservative[ly]’ estimated at $550m through 2021,” the filing states.
Buy him out, boys
Google’s highest level execs, it’s claimed, suggested giving Epic Games a deal “worth up to $208m (incremental cost to Google of $147m) over three years” to keep the game maker compliant. And if Epic did not accept, the court filing alleges, “a senior Google executive proposed that Google ‘consider approaching Tencent,’ a company that owns a minority stake in Epic, ‘to either (a) buy Epic shares from Tencent to get more control over Epic,’ or ‘(b) join up with Tencent to buy 100 per cent of Epic.'”
The filing contends that in 2019 Google’s internal estimate was that the company could lose between $1.1bn and $6bn by 2022 if Android app stores operated by Amazon and Samsung gain traction. The Epic Games Store, it’s said, could have cost Google $350m during that period.
Another Google executive, contemplating the possibility of Fortnite launching on Android outside of the Google Play store as a sideloaded app, is said to have argued for discontinuing sideloading or making it very difficult.
The unidentified senior Google executive is quoted as acknowledging that such a move would be “difficult move in the face of the EC [European Commission] decision but we have good privacy/security arguments about why sideloading is dangerous to the user).”
When Epic refused the deal, the complaint contends that Google did indeed try to generate fear of sideloading by releasing data about insecure sideloaded Android apps during Fornite’s Android debut.
The redlined complaint says, “In the immediate wake of that decision [to reject Google’s deal], to discourage consumers from direct downloading Fortnite, the Google Play security team began collecting ‘exciting’ statistics on ‘fake apps caught by [Google Play Protect] from off-Play downloads’ that it shared not with Epic or users, but rather with a Google Communications Manager for use in ‘coverage’ by journalists of Epic’s decision to launch Fortnite off Google Play.”
Google, it’s claimed, also arranged to pay games developers hundreds of millions of dollars to remain within its ecosystem after Epic was booted out. The filing describes what was initially referred to as “Project Hug” and is now called “Apps and Games Velocity Programs.” Its alleged purpose was to “‘[mitigate] risk that top game developers de-prioritize Google Play for title distribution’ and secure the ‘Play revenue / margin at risk,’ which was ‘up to $6bn / $1.1bn in 2022’ alone.” In other words, ensure no one else pulls a Fortnite and allows players to bypass the Play store’s purchasing system.
The filing continued:
What’s more, Epic suggests that Google’s cooperation with Apple since 2010, through which Apple receives billions annually to make Google Search the default search service on iOS, has disincentivized Google from competing with Apple.
“After a meeting involving senior executives of Google and Apple, notes of the meeting were exchanged between the two companies,” Epic’s filing says. “The notes reflect: ‘Our vision is that we work as if we are one company.'”
Google did not immediately respond to a request for comment. ®