5 Things we learned from this week’s Epic-Google antitrust case

Although Match settled its antitrust case with Google over the Play Store’s payment north of $300 million, Fortnite maker Epic Games continued to settle the case this week. The game maker argued that Google’s commissions on in-app purchases were anti-competitive and that Google was using its market power to compete unfairly by negotiating special deals with developers. and manufacturers running their own app stores.

We already know about Epic’s allegations against Google, but now they have been presented in court, along with witness testimony. Epic pushed to present this case in front of a jury instead of running a bench trial – a significant difference from its battle with Apple on the same matter, which Apple mostly won. (Epic is now asking the Supreme Court to weigh in on that). With a jury trial, this case could have been different than others, because regular people — mobile app consumers, themselves — could interpret Epic’s claims about competition as different than a judge weighing precedents set by contract law or antitrust regulations.

As arguments and witness testimony began this week, we learned a few things about Google’s Play Store business. Among the highlights are:

Google paid Activision Blizzard $360 million to launch its games on the Play Store

Epic Games lawyers present details about Google’s “Project Hug,” which encourages app developers to launch their games on the Play Store — or, as Epic says, Google “hires” them . An important example was brought to court, where Offered by Google “Call of Duty” maker Activision Blizzard $360 million in incentives in 2020 to bring its games to Google Play at the same time as they appear on rival platforms. Epic’s argument is that Google uses these payments to prevent developers from releasing games independently, such as in their own app stores. These deals also include an $18 million deal with Tencent’s Riot Games in 2020.

Google, however, pushed back saying that Project Hug is how Google competes with other app stores, including Apple’s App Store, Samsung’s Galaxy Store, and the Amazon Appstore. It also told jurors that game developers were not prevented from launching their own app stores as part of these agreements, which includes things like ad credits and marketing opportunities, Bloomberg reported. But Google’s arguments may be undermined by documents that show how Activision Blizzard’s King and Riot Games unit failed to take a 30% cut from Google, and are considering launching “off-Play” gaming platforms. distribution.

Google offered Epic Games $147 million to launch Fortnite on the Play Store

In addition to its deals with Activision Blizzard and Riot Games, Google also confirmed that Epic has been offered a $147 million deal to bring Fortnite to the Play Store, The Verge reports. The agreement was to be paid over a three-year period ending in 2021, but Epic rejected the offer. Documents presented to the court show that Google fears a “contagion risk” if other major game developers follow Epic’s lead in launching its games outside of Google Play, which would cost Google billions in lost revenue. . The documents reveal that Google plans to lose $130 to $250 million in revenue from the loss of Fortnite and if other major game developers such as Blizzard, Valve, Sony, and Nintendo also leave the Play Store, loss can grow to $3.6 billion.

Google rejects apps for “management” – or designating other payment methods outside of the Play Store

Testimony from Benjamin Simon, whose company Yoga Buddhi makes an app called Down Dog, confirmed that Google rejected his app for “steering” — a term that can refer to linking or even simply telling app customers about in other ways they can pay for app services outside. in the Play Store where Google Play Billing is used. Down Dog on the Play Store costs $60/year or $10/month, but the developer pays less for his own website ($40/yr or $8/mo) because he does not have to pay commissions to Google. That has clear benefits to consumers, but “control” is something Google and Apple restrict in their app store developer agreements. This is one area where Apple lost the court battle with Epic Games, in fact. The court ruled that Apple was not a monopolist, but it deemed the anti-steering clause illegal under California’s Unfair Competition Law.

The Play Store makes more than $12 billion a year for Google, but Epic’s Games Store isn’t profitable

Epic’s lawyers pointed to the dominance of the Play Store, noting that 90% of all Android apps in the US are downloaded from this market. It is also said that the Play Store generated more than $12 billion per year of operating profits and brought in a 70% profit margin, up from 24% in 2014, VentureBeat reported. Google countered these arguments by pointing out that other major apps, such as OpenAI’s ChatGPT will be available on iOS first. This competition from Apple means it is not a monopolist, Google’s lawyers say. Meanwhile, testimony from Epic’s Steve Allison showed that the Epic Games Store, which only required a 12% cut of developer revenue and developers kept 88%, still not profit.

Google gave Netflix a special deal, and maybe Spotify got one too

Google negotiated a special deal with Netflix to keep its payment processing in the Play Store. The documents shown in the test show that Google offers Netflix a discounted rate by 10% in 2017, allowing Netflix to keep 90% of its earnings from in-app purchases, The Verge reported. Google also asked the court to seal the documents related to the deal with Spotify, the outlet also said, which allows the streamer to use Google’s new User Choice Billing option – a way for the developer to process his own payments. Usually, it gives the developer a 4% discount, so Google’s request to hide the terms of the deal with Spotify seems suspicious. Google’s lawyer said doing so would “harm” conversations with other parties. Epic was also offered the chance to adopt User Choice Billing, but rejected it.

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