Epic Games knew exactly what it wanted, and when it brought Apple to court, it was clear that App Store hypocrisy was the goal. However, the reason for a parallel case against Google was not as clear-cut. It wasn't until today that we learned about the most serious accusations against the Android giant.
Judge James Donato opened a completely unredacted version Epic's original complaint against Google on Thursday (via Leah Nylen). It alleges that Epic was so concerned about setting a precedent and abandoning its Play Store, it launched a wide-ranging effort to stop developers following the company's lead. This included paying top game developers like Activision Blizzard and sharing additional portions of its revenue with phones makers if they didn't preinstall other apps.
Project Hug and Premier Device Program
Did you know that OnePlus was forced to end a deal by Google which would have allowed the Fortnite Launcher to be preinstalled on its phones? According to reports, Motorola and LG struck a deal that gave them 12 percent of search revenue and up to 6 per cent of money spent in the Play Store. This was exclusive to Google. OnePlus sister brands Oppo, Vivo and Vivo joined the program. BBK committed the majority of its phones to this exclusive program. HMD Global, Nokia's phone maker, joined the program along with Sharp, Xiaomi and another unnamed brand.
These tactics may sound familiar because 36 state attorneys general claimed that Google used similar hush-hush agreements against Samsung's Galaxy Store in an antitrust lawsuit filed against Google in July. Epic claims that Google called it Project Agave.
Google apparently considered the so-called Premier Device Program a huge success.
Google presented a presentation to senior executives of Google Play. It noted that over 200 million devices had been covered in the relatively short time period since the program began. Google also stated that they believed the new RSAs had successfully eliminated the risk that app developers could contract contagion. They also noted that there was no risk with the current Premier tier.
Google suggested buying Epic to eliminate the threat from Epics back. Tencent, a Chinese tech giant and minority owner, approached Google. Tencent currently holds a 40% stake in Epic. According to the unredacted complaint, there were two options: a) Buy Epic shares from Tencent to gain more control over Epic; or b) Join Tencent to purchase 100% of Epic.
It's unclear if Tencent was actually approached by Google
This is on top of the July 2018 deals Google had directly with Epic. In which Alphabets CFO, and other senior Google executives offered special benefits totaling $208 million over three years in order to bring Fortnite onto Google Play. It would effectively mean that Google would take 25 percent of games revenue instead the usual 30 percent. Google tried to persuade Epic to sign the deal by pointing to the 15+ steps that gamers would have to go through to sideload Fortnite for Android.
It is interesting to note that this was the month Epic announced that it would be discontinuing the Play Store. This suggests that Google was able to access Epics sideloading plans before CEO Tim Sweney's February 2018 directives to his team to SAY NO TILL IT SHIPS!
This suggests that Epic may have offered special deals, and not Google. Epic had to defend its claim that Epic asked for special billing exception a year later. If you read item #38 of my big story about Epic v. Apple trial you'll see Epic planned to set up a legal trap for Google well before Apple became the primary target.
Google was allegedly so afraid that it used these tactics. It believed that billions of dollars were at risk. Epics assessment stated that Google believed Epic had created a contagion threat that would spread to other developers of games.
Particularly, the documents Googles Finance Director for Platforms and Ecosystems prepared to the CFO at Alphabet during Fortnites launch showed that Google was concerned about a contagion risk. This is due to more and more developers leaving Google Play. Google was concerned that contagion could spread in the following ways: First, inspired by Epics, [p]owerful developers like Valve, Sony and Nintendocreators some of the most successful and profitable entertainment would be ableto go their own way, bypassing Play, by directly distributing their apps. Other [m]ajor developers like Electronic Arts, King and Supercell will colaunch Play, working together to avoid Google's distribution services. Google identified the risk that all remaining titles would launch Play. Google estimated that the at-risk revenue due to the loss of market share in Android apps distribution was $3.6B. The probability-weighted loss is conservatively projected at $550M through 2021. Google recognized that its monopoly in Android app distribution was further weakened by the recent Fortnite + Samsung partnership. Google refused to allow this to happen.
Epics partnership and determination to use Fortnite's Google Play distribution platform to distribute Fortnite drew fear in senior Google executives. Epic also wrote that Google could lose as much as $6B in revenue by 2022 if Samsung, Amazon, and other app stores can strip Google Play game developers.
Epics unredacted complaint may also explain some other tidbits that we spotted in filings, such as Epic CEO Tim Sweney's cryptic assurances to Samsungs DJ Koh (#32) or Epic including an entire presentation in evidence regarding how Google feels it might be struggling with gaming. Below is a slide that you can view.
Epic may not have been able to achieve the same success with Fortnite mobile as it did with Fortnite consoles. As I explain in the last section of Epic v. Apple emails story: Mobile is only a small part of Epic's business, and probably not the best place to play gateway drugs.
It seems like Epics chances weren't helped by Google. And it is impossible to know how popular Fortnite Mobile would have been if Epic had not challenged the standard app store or had a simpler time setting up its own store. These documents reveal that Fortnite was extremely inefficient on Android while its competitors, PUBG Mobile and Call of Duty, were thriving around the globe.
This also shows Google quietly trying to build the walled garden Apple has always envisioned. It was alleged that the company had been threatening software developers with a series of contracts to lock down their phone manufacturers. This makes it more likely that an antitrust suit against one of the major mobile operating systems will be filed.
