More from Epic v. Google: everything we learned in Fortnite court
Samat says yes, he personally negotiated the new proposed settlement with Epic, starting last fall. He’s being questioned by Google’s lead attorney Glenn Pomerantz, as he’s Google’s witness; Epic and the judge have been asking all the questions up till now. Like Epic’s Sweeney, he says the reason to settle was to “reduce the amount of effort and energy” it would spend to keep fighting around the world.
“With the friction screens we lost 65 percent of users, with them removed we’re trending towards a 20 percent drop off rate,” he says, “which gives us confidence that installing stores from the web is a completely viable solution.” The point here is that Google and Epic’s new settlement no longer forces Google to host stores within its own store, but it does commit to removing the friction for web-based sideloading... as long as the stores are registered with Google’s proposed program and jump through whatever hoops Google has.
While Epic may be trying to make secret business deals with Google at the same time it’s trying to settle, Epic’s lead attorney Gary Bornstein made sure to ask Tim Sweeney to clarify one bit as soon as the courtroom re-opened for business. “Will the Epic Games Store get any special treatment from Android in the future under this deal?” he asked. Sweeney said no.
Sweeney told me he loved the bingo card we made during the trial, back in 2023. The courtroom is taking a 15-minute break now.
“I don’t see anything crooked about Epic paying Google off to encourage much more robust competition than they’ve allowed in the past,” he says, as the courtroom turns to page 8 of a term sheet that it’s not showing journalists... about Epic and Google’s secret new deal together.
The secret deal includes Unreal Engine, Tim slipped up to reveal, and it includes Epic spending $800 million over six years to purchase some sort of service from Google. (perhaps cloud?) We put about 80 percent into a different vendor [...] every year we’ve decided against Google, in this year we’re deciding to use Google at market rates,” he says. “We view this as a significant transfer of value from Epic to Google.”
He claims there’s not a joint product development deal with Google exactly. “This is Google and Epic each separately building product lines,” he says, after the judge points out a line in the document that reads “Google and Epic will work together.”
That’s Judge James Donato to Epic CEO Tim Sweeney, asking him whether he thinks Google is an open platform today, when he called it a “fake open platform” in the past and had publicly given up on that ever changing.
Sweeney doesn’t have a great answer. Also, I missed copying down what he did said because I was so distracted by what the courtroom revealed right afterwards... one moment on that.
Sweeney says he reached out in late September of last year. “I reached out to Google after the 9th Circuit Court had ruled on the case, and Sameer Samat was willing to discuss.”
“I felt that events in the world in Epic v. Google and Epic v. Apple were going our way, but globally we were still facing a many year fight, country by country,” he says, deciding that settling was better than continuing to fight other cases around the world.
The judge is not buying this, as you’ll see in my next dispatch.
Epic lead attorney Gary Bornstein, earlier:
“The reason we asked for global, it’s to ensure that even in the United States, there will be sufficient competition because there will be sufficient incentives for people like Epic and small companies to make the investment nescessary to get the scale they need to reach a sufficient portion of the users in the world, not just the 5 percent in the United States.”
Epic CEO Tim Sweeney, now: “Developers make apps and ship them broadly across all of the world [...] every store will be able to do a much better job of serving US users if it can reach a worldwide audience.”
The original injunction only applies to the US, but the new proposed settlement has terms that would apply globally.
He was careful not to step on my backpack on his way out of the row; thank you, Tim.
Some choice Donato quotes towards Epic’s lead attorney:
- “We have no idea what the world’s going to look like in June of this year, much less three years from now.”
- “They’ve gotten rid of the two things they hated most, and now you’re trying to sell me on the idea this is good for competition and developers?” (“they” referring to Google)
- “I’m not throwing anything out right now. You want something more than that, come and tell me. Why aren’t you building on the edifice rather than tearing it down?”
Judge Donato says he just doesn’t get it.
Here’s Epic’s lead attorney Gary Bornstein to answer:
“We love those remedies, period, full stop. We like them, we asked for them, we like them the way we asked for them. Now we have another option that’s on the table that’s the result of a negotiation with Google. We got something through this negotiation that was not on the table before.”
“The only reason Epic is here is because Epic believes this set of remedies in totality will provide longer-term sustainable competition,” says Bornstein. He says holding out for something like this is “the reason Epic didn’t take payoffs back in the day” from Google’s Project Hug and similar.
Judge Donato says that with three years to set up competing app stores on Android, Amazon, Meta, Microsoft and more will surely pile on. “The problem we have now is the box has already been rigged terribly with anticompetitive conduct so that Google is way ahead.”
The overarching question: “Three years and a day, what’s going to happen?”
Bernheim says even if they build those stores, Google will cut off Amazon and co. “Google at that point in time is going to say you can’t have an app that downloads things.” Or erect more friction to sideloading apps.
I don’t quite understand how that changes if were six years rather than three, or why Google wouldn’t shut down its proposed Registered App Store program the same way if that got approved.
“By taking away one part of what I’ve proposed, the effectiveness of the other part declines,” says Bernheim, answering the judge’s question about why he didn’t bring all these proposals before.
“The choice was presented to me that if you want these provisions, which of these do you want? Do you want the ones that are going to provide the better opportunities for competitions to survive, that were in my proposals, or the ones that allow competition to get jumpstarted, which were also in my proposals, which do you pick?”
He seems to be saying that Judge Donato didn’t pick enough of them to make a real dent when he issued his permanent injunction, and didn’t make it last long enough or apply around the world, and so what he truly wanted for competition isn’t happening anyways. So the new settlement is overall better, he’s arguing.
“Why did you press so hard for catalog access if you’re willing to throw it out the window today?” asks Judge Donato.
Bernheim replies: “I don’t want to throw it out [...] I would love to keep it.”
Bernheim says there’s a tradeoff, though. “If you want to get competition going and as a compliment to that you have a remedy that will ensure the competition, once it develops, will continue, that it has a path for continuing, then those remedies that we’ve described will be extremely effective.”
That’s Judge James Donato, continuing to be skeptical, addressing Doug Bernheim, the Epic economist.
Bernheim agrees with the judge that Google still monopolizes the Android app market and payments market; that the facts haven’t materially changed on the ground.
Bernheim says he “would love to have all” of the anti-Google monopoly recommendations he originally argued for, but that he’s just analyzing what’s in front of him, and that Judge Donato’s existing injunction simply doesn’t last long enough at just three years rather than six.
“When that ends, developers are going to be very dependent on off-Google Play distribution,” he says. “To the extent those frictions are still in place, that will be a problem at that point in time [...] they’ll be reliant on a process that has already been shown not to work well.”
He brings up the example of how Amazon’s Appstore never got traction because users had to click through too many Google barriers.
“You called catalog access THE critical remedy to counter the network effects and the pattern of dominance,” says Donato, suggesting that Bernheim is attempting to mislead by suggesting the settlement would be viable without forcing Google to offer up its catalog of apps to rival app stores.
“I questioned you about the need for the duration period, and you said it was such a critical remedy you advocated for a period twice as long,” says Donato.
He appears to have been commissioned by Epic to analyze the settlement’s modified injunction vs. Judge Donato’s original injunction. “There are some very important pluses, there are some very important minuses,” says Bernheim.
His “main pluses” include:
- “Registered app store program offers low-friction path for stores to get onto users’ phones” (but how does he know it’s low-friction?)
- No fees on competing app stores or the apps they distribute
- Global steering and alternative payment systems, with capped fees
Main minuses?
- Removes the catalog access remedy (Google won’t be forced to offer its apps to other stores)
- Removes the store distribution remedy (Google won’t be forced into store-within-a-store)
- Allows Google to insist on side-by-side billing (app devs would still have to offer Google Play Billing alongside their own)
He’s just been sworn in, and he’s prepared slides; Unfortunately, the screen on my side of the room is dead, so I’ve migrated to the other side, apologizing to several people who graciously moved for me. Bernheim featured prominently during the trial portion of this case.
We’re about to hear the bitter foes-turned-BFFs explain why Judge James Donato should accept their settlement after five-plus years of legal battle. Judge Donato has just entered; Sweeney was on his phone but has put it away. Samat was waiting patiently; he’s got an eye-catching thin beaded bracelet on his wrist.
Judge Donato is now ordering an evidentiary hearing in Epic v. Google, Law360’s Bonnie Eslinger reports from the courtroom. She writes Donato is “not sure the proposed deal will correct Google’s illegal conduct,” and was skeptical that Epic and Google “are suddenly BFFs.”
