wordpress blog stats
Connect with us

Hi, what are you looking for?

What the unredacted Epic Games lawsuit reveals about Google’s antitrust practices

The information that was made public highlighted Google’s strategies to deal with the issue that arose last year when a payment system allowed Fortnite users to pay directly to Epic Games, the developer. 

Epic Games has won a stretched-out side battle to unseal its antitrust lawsuit petition against Google in the US District Court of Northern California on August 19. It has since released the unredacted complaint, Politico reported. Google fought the disclosure of the redacted portions, per a Reuters report, and complained through its lawyers that Epic was subverting the redactions it had requested by including information from the blacked-out portions of the complaint in other public communications. Eventually, though, the complaint was unredacted, and MediaNama obtained both versions of the document to compare.

The Fortnite developer sued Google (as well as Apple) for allegedly forcing it into a payment system where the tech giants get a cut of individual transactions. Epic’s complaint against Google goes into significant depth on the latter’s strategies to deal with competitive threats, both on Play Store and in general. You can read our coverage of the initial complaint here. In this report, we will look at some of the new information that gives colour to Epic’s complaint against Google.

The complaint’s outcome could have significant antitrust ramifications, including in India, where the Competition Commission of India is already scrutinising Play Store. Information that becomes public in this lawsuit will become available to investigators in India and in other markets where Big Tech companies’ dominance is increasingly being questioned.

“Contemplated buying Epic”

  • Google considered buying Epic: “Google uses its size, influence, power, and money to induce third parties into anticompetitive agreements that further entrench its monopolies. For example, Google has gone so far as to share its monopoly profits with business partners to secure their agreement to fence out competition, has developed a series of internal projects to address the “contagion” it perceived from efforts by Epic and others to offer consumers and developers competitive alternatives, and has even contemplated buying some or all of Epic to squelch this threat,” Epic’s filing revealed. (This revelation came in a less, but still somewhat redacted version of the complaint that was released earlier this month. This list includes all revelations that were redacted in the original complaint.)
  • Coercing phone makers: Epic said that internal Google documents showed that the company put pressure on phone makers (OEMs) to make Play Store the only app marketplace that shipped with the phone. “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,” a previously redacted section said. “Google has erected these contractual barriers to competition for Android app distribution in the recognition that Google stands to lose billions of dollars if Android app distribution were opened to competition and competing Android app stores, including an “Epic Store”, were allowed to “gain full traction”.”
    • Feared “contagion”: Google reportedly feared a domino effect from playing out due to a deal Samsung signed with Epic to distribute Fortnite. “Google feared what it termed a “contagion risk” resulting from more and more app developers forgoing Google Play. Google feared that the “contagion” would spread in this way: first, inspired by Epic’s example, “[p]owerful developers” such as “Blizzard, Valve, Sony, Nintendo”—creators of some of the most popular and profitable entertainment—would be “able to go on their own”, bypassing Play by directly distributing their own apps. […] Google calculated the total at-risk revenue from the threatened loss of market share in Android app distribution to be $3.6B,” the complaint stated.
  • Making it harder to install apps: “Leading Google Play executives have acknowledged that directly downloading Fortnite from a source other than Google Play is “an awful experience”, and developers like Epic should “worry that most will not go through the 15+ steps”,” another previously redacted portion of the complaint said.

While in theory, Android seems more open than iOS (as far as allowing third-party app stores at all is concerned), the efforts stated in the complaint appear aimed at protecting exclusivity which Apple’s App Store achieves by simply prohibiting other marketplaces that distribute apps. “Pursuant to these exclusivity agreements, Google agrees to share with OEMs monopoly profits Google earns from its Search business (and in some cases, profits from the Play Store itself), in exchange for these OEMs’ agreement not to pre-install alternative app stores,” Epic said in another unredacted portion. Google started a “Premier” tier of agreements with OEMs where it effectively prohibited their Android devices from having “apps that can install other apps,” which translates to competing app marketplaces.

“Project Hug”

In the section where Epic describes “side deals” Google offered to game developers to placate their concerns on Play Store restrictions, the unmasked portion reveals that this was such a coordinated strategy that it even had an internal name:

Advertisement. Scroll to continue reading.

Google has reached preferential deals with major mobile app developers, such as Activision Blizzard, as part of an initiative Google originally called Project Hug and now refers to as the Apps and Games Velocity Programs. These deals allow Google to keep its monopolistic behavior publicly unchallenged. (bolded portion was previously redacted; emphasis ours)

Google Play is dominant, and Google knows it: In another redacted portion, Epic used Google’s own words against itself to undermine any argument the company may make to say that the Play Store faces significant competition:

A 2017 internal Google report confirmed that “[the Google] Play Store dominates in all countries”, including the United States. Google has recognized that in one quarter (June to September 2016), app installations through channels other than Google Play (including direct downloads and competing app stores) amounted to a mere 4.4% of Android app downloads in the United States. — unredacted Epic lawsuit

“Will always compete, cooperate with Apple”: Google co-founder Larry Page once had a meeting with the late Apple CEO Steve Jobs, where he apparently said that “there will always be places we [Google and Apple] compete, and places where we cooperate.” (This was cited in a reference to Google’s deal with Apple to have its search engine as the default across Apple’s web browser and Siri voice assistant.) “Our vision is that we work as one company,” notes from a different Google–Apple meeting obtained by Epic revealed.

Considered getting Epic equity from Tencent

Significantly, Google internally considered trying to arrest Epic’s attempts to distribute Fortnite off-Play Store by reaching out to Tencent to buy the Chinese company’s stake in the developer. While this stopped short of Google’s other option to acquire the company all-out, it is an interesting potential tactic:

Google recognized that Epic might not accept its offer [for a better revenue split on in-app purchases]. “As a potential alternative”, 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% of Epic”. Another senior Google executive suggested that if Epic chose not to launch Fortnite on Google Play, Google could “lock down Play/Android and [not] allow sideloading (or make it very hard to sideload (policy position or even architecture) – difficult move in the face of the EC decision but we have good privacy/security arguments about why sideloading is dangerous to the user)” — unredacted Epic lawsuit

Trying to shrink Samsung Galaxy Store

Google tried to pay Samsung to scale down the Galaxy Store which ships on the Korean phone maker’s devices, an effort dubbed initially by the company as “Project Banyan”.

As one Google employee explained, “Samsung’s duplication of our services on Android is one of the critical issues with the partnership right now. Samsung Apps relative to Google Play is one of the most glaring. […] Documents that Google has produced to Epic reveal that Google sought an “[i]ndividual surgical deal[]” with Samsung, in which Google would secure, among other things, “play protections” and in exchange give Samsung a “rev share on browsers and assistant”, a percentage “of Play rev share on [in-app purchases] powered by Google”, and “Billing integrations for App Gallery” — unredacted Epic lawsuit

The Galaxy Store remains pre-installed on Samsung devices.

Also read

Advertisement. Scroll to continue reading.

Have something to add? Post your comment and gift someone a MediaNama subscription.

Written By

I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.

News

In this excerpt from the book, the authors focus on personal data and autocracies. One in particular – Russia.  Autocracies always prioritize information control...

News

By Jai Vipra, Senior Resident Fellow at Vidhi Centre for Legal Policy The use of new technology, including facial recognition technology (FRT) by police...

News

By Stella Joseph, Prakhil Mishra, and Yash Desai The Government of India circulated proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020 (“E-Commerce Rules”) which...

News

By Rahul Rai and Shruti Aji Murali A little less than a year since their release, the Consumer Protection (E-commerce) Rules, 2020 is being amended....

You May Also Like

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ