Technology: Fortnite maker Epic Games illustrates the losses Google expected if Epic managed to distribute the game to Android devices outside of the Play Store.


Liam Tung

Monday 23 August 2021

Court documents reveal how far Google was willing to go to prevent game developers from doing like Fortnite publisher Epic Games to distribute the game on Android outside of the Play Store.

Details on Google’s plan to partner with Tencent, which owns a 40% stake in Epic Games, were released via The Verge and Politico reporter Leah Nylen.

Google feared a “contagion” among game developers if Epic managed to avoid having to go through the Play Store. Ultimately, this would have allowed the publisher to use its own Epic Games Store and the Fortnite Launcher, possibly preinstalled on smartphones.

Google’s tactics were to pay big game developers and make revenue sharing deals with smartphone makers so they didn’t preinstall non-Google app stores on their devices.

In 2019, Google offered Epic Games a special revenue-sharing deal that would have increased the 70/30 split to 65/25, while apparently leaving the 70/30 split intact, according to Epic. Google knew that Epic might not agree to the deal and would have offered to buy out Tencent’s stake in Epic, or complete a 100% buyout of Epic.

Epic’s lawyers cite a 2019 document from Google Finance, which estimates that setting up an Epic store would represent a loss of Play Store revenue of between $ 350 million and $ 1.4 billion by 2022. The other app stores distributed on Android by Samsung and Amazon could lead to a drop in revenue of between $ 1.1 billion and $ 6 billion by 2022.

In 2019, Google launched the Premier Device Program, with deals that required Google Play exclusivity on the program’s devices, in exchange for 4% of Google’s search revenue to participating OEMs. LG and Motorola were offered 3-6% of Play Store revenue on covered devices, but others like HMD Global, maker of Nokia, Sony, Xiaomi and Oppo and Vivo, owned by BKK, also joined the program.

Epic’s attorneys cite documents that Google’s CFO of Platforms and Ecosystems prepared for Alphabet’s CFO around the time of Fortnite’s launch on Android, which “show Google feared what it called a “risk of contagion” resulting from the fact that more and more developers of applications would give up the Google Play Store “.

Google feared that “powerful” game makers like Blizzard, Valve, Sony and Nintendo would follow Epic’s example, bypassing the Play Store by distributing their own apps directly to smartphones.

“Then, other” big developers “, including Electronic Arts, King, Supercell and Ubisoft, will choose to” co-launch (video games) outside the Play Store “, by collaborating to also give up the distribution services of Google. “

“Google calculated that the total revenue at risk resulting from the threat of loss of market share in the distribution of Android applications was $ 3.6 billion, with the probability-weighted loss estimated to be $ 550 million. dollars until 2021. Google has also acknowledged that the “recent Fortnite Samsung partnership further amplifies the risk and urgency of the problem” facing its monopoly position in the distribution of Android applications. Google was determined not to let this happen.

Epic is lashing out at both Google and Apple over the App Store terms, alleging that the two mobile operating system makers have abused their power.

Both lawsuits come as US and European competition regulators investigate the practices of the App Store and Play Store. In July, attorneys general in 36 states in the United States and in Washington DC filed an antitrust lawsuit against Google over the Play Store.

The revenue Google feared losing to other app stores would significantly reduce its current revenue. According to mobile analytics company App Annie, Google Play revenue grew 20% year-over-year to $ 12 billion in the first quarter of 2021. Apple’s App Store revenue increased 30% % to reach $ 22 billion over the same period. Games represent an important part of this income; users spend an average of around $ 1.7 billion per week on the App Store and Play Store.

Google Maps users may soon have more detailed information about their road trips.

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Liam Tung

Monday 23 August 2021

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