More from Epic v. Google: everything we learned in Fortnite court
Sameer Samat, VP of Android product management, telling Lockheimer that one of its 15 percent revenue share cuts (in 2017) was directly provoked by Apple.
Google originally wanted to lick the cookie but didn’t manage it. (One last bingo stamp for you!)
Epic’s attorney is now combating the assertion that the change was designed to compete with Apple, pointing out how long it took Google to follow Apple here and that Samat also pointed out, “We will not make this happen in a very vocal way.”
Google showed us a “Switch to iPhone” ad from 2018 that’s unfortunately no longer on YouTube. I’ll let AppleInsider’s description suffice:
A woman takes one of the icons off the shelf on the “Your Store” side and it blows blue powder in her face. She then walks over to the “App Store” section as the “Your Store” shelf collapses and the word “safer” appears.
“It’s an ad from Apple showing, basically saying that when you grab an app from the shelf, you never know what you’re going to get from the Android side,” says Lockheimer.
Lockheimer looked directly at the jury when he said that.
“We want users to understand that the apps they’re about to sideload haven’t gone through the same level of security checks as the apps we run through the Play Store,” he says.
And we’re seeing that the head of Samsung’s mobile business, DJ Koh, expressed concern in September 2015 that Android wasn’t secured well enough against sideloaded apps (I added the link you see):
WeChat and Didi Kuaidi, on Apple store embed malware in these apps. When this breach happened, Apple just deleted these compromised apps from their store and this blocked the propagation of the compromised app. This is a simple and effective action, however, such an action does not work very well on Android due to Android’s app distribution mechanism allowing sideloading and self-signed apps.
Koh added later: “I think it is time to serious think [sic] about the security baseline of Android and how to improve it.”
Lockheimer just became the first Googler to pull out a phone on the stand — two of them, a Samsung Z Flip and a Pixel Fold. No sideloading walkthrough, I’m afraid; they were a simple example of how Google is attempting to innovate on Android to compete with Apple.
Hey, Hiroshi: those phones belong to the judge now. Sorry, I don’t make the rules!
Anywhere from 4 to 10 percent of users are switching from Android to iOS in a given year, Google lead attorney Glenn Pomerantz is suggesting.
In recent years, Google has been campaigning against Apple’s iMessage lock-in to try to regain those youth. Not that iMessage lock-in is a new issue or anything.
Unlike Sundar, he’s been a relatively defensive, non-committal witness on the stand. But he’s getting the same treatment to begin: where did you go to college, how did you join Google, what is Google’s mission, etc.
It’s a nice palate cleanser. And we’re on to a new narrative from Google with Lockheimer’s help: that it was struggling (not merely competing) against the iPhone.
Lockheimer, too, didn’t turn on his chat history to preserve evidence, it seems. Epic says his lawyers told them he never took any steps to preserve chats. As with many things, Lockheimer said he wasn’t aware.
We do have one chat between Lockheimer and former YouTube CEO Susan Wojcicki, though, where they talk about how YouTube is being forced into Google Play Billing while “Spotify is our competitor who is being exempted,” according to Wojcicki.
Lockheimer is now Google’s witness.
Lockheimer said no, it wasn’t Google’s plan to tip off the press about the bug in 2018.
But his email suggests otherwise:
1. Ed needs to update the thread (ideally today) to notify Epic that we are going to make the bug public tomorrow now that it’s been 7 days since they fixed it.
2. Bug goes live tomorrow morning 9am PT
3. We tip off press about the bug and share our reactive statement and background points.
“We shared the bug with Android Central and worked with them today to shape a piece,” Google spokesperson Shannon Newberry replied later. “Great headline and conveys the points we wanted to convey.”
“Well done! Thank you,” replied Lockheimer.
They see opportunity to express frustration closed ecosystems through use of sideloading on Android to distribute via their website, threatening Play revenue ($130M directly) and broader business model.
and
High risk of contagion: Tencent is an investor in Epic and in other major game developers, and will have visibility into this deal; high risk that other games seek other distribution channels as well (up to $310M in revenue at risk)
Epic’s lead attorney is pointing out that if Google was willing to spend $147M on Epic to protect against $130M worth of damage, there must have been something deeper at stake — the “contagion.” Lockheimer isn’t answering that directly. He’s being a very argumentative witness and, in fact, just got told off by the judge.
Lockheimer has just been asked about that time Google went to its Business Council (anybody got bingo yet?) to try to get approval to offer Epic a big $147M deal to get Fortnite on the Play Store rather than launching elsewhere.
He says yes, you have to go to the Business Council for certain kinds of expenditures.
And Lockheimer was listed atop the stack of seven “Deal Representatives” who pitched the Business Council on this deal.
While Android boss Hiroshi Lockheimer has already admitted he thinks of Samsung as both a partner and competitor, Epic is now pursuing the handshake deal angle it alluded to the other day in court.
For example: Lockheimer emailed Samsung Mobile president DJ Koh on July 11th, 2014, to say he was “surprised” that Samsung went ahead with a big Galaxy Store rebrand without his knowledge (technically, that one was called Galaxy Apps).
Koh was then cc’d on an email back to Lockheimer explaining away the change:
We definitely don’t want to compete with Play Store, but we had to make some changes to it to provide Samsung customers with better value. So they (folks at MSC) decided to re-brand the store to Galaxy Apps and this new store will only have a few hundreds apps.
Lockheimer says he was surprised simply because he’d just been in Korea to meet with Samsung, and it didn’t mention Galaxy Apps.
He also agreed that he sometimes texted DJ Koh on the side as part of the business relationship.
“That Android Open Source Project is not being used by any Android smartphone in the United States today, right?”
Lockheimer won’t go that far. He says he doesn’t know. But he also says he can’t name a single phone that only uses AOSP without also bundling GMS (Google Mobile Services) apps on top — which requires signing a MADA contract with Google.
(When it’s Google’s turn, Lockheimer might get to explain that Google’s long used contracts to prevent Android fragmentation, giving users a better chance of getting their phone updated.)
“GMS is a highly sought after set of products, and it brings OEMs to the negotiating table. If we put all GMS in market, there’s less incentive for OEMs to negotiate for GMS,” Lockheimer wrote in a 2011 email.
While it is sadly not on our bingo cards, the Android Open Source Project is indeed one of Google’s regular defenses in this case — Google, including CEO Sundar Pichai, have explained that anyone can go build an Android phone if they don’t like Google’s practices or apps because Google makes the core software available for free.
Now, Epic is quizzing Android chief Hiroshi Lockheimer about it. If you’ve been following my dispatches from the trial, you probably know what’s coming next. (Epic will try to show that AOSP isn’t enough to make a phone viable.)
I don’t remember hearing that, but Epic lead attorney Gary Bornstein just asked Hiroshi Lockheimer, “True or false: people change their phones every six months?” Lockheimer said no, and Bornstein said, “So that statement we heard earlier in this courtroom: false?” and that didn’t make any sense to Lockheimer (who hasn’t been in the room) or me.
Maybe I missed something. Google didn’t object, so perhaps it happened.
We’re now hearing from Google’s leader of Android, Chrome, ChromeOS, and other things — Hiroshi Lockheimer leads the platforms and ecosystems team, and he’s been one of the public faces of Android for many years. The Verge’s staff have often spotted him at events.
He says Jamie Rosenberg, a former head of Google Play who took the stand yesterday, reported to him.
Semi-privately, Chu believed it was bad for YouTube to switch to Google Play Billing, despite being fair.
“That revenue is at risk already... but the opportunity costs for Youtube to move to Play is that instead of rolling out new features and whatnot, YouTube is spending time migrating to Play,” he told attorneys in the 2022 video deposition.
We saw earlier in the trial that YouTube long resisted switching to Google Play Billing, which seemed... mighty convenient for the Google-owned property when Google pushes other developers that way.
Now, we’re seeing that original Android app store boss Eric Chu helped defend that decision — for a time — when he joined YouTube in 2018.
“Data integration will significantly limit YouTube’s ability to innovate — significant eng efforts at the expense of moving our paid business forward,” he wrote. Later, in 2020, he suggested that YouTube would need to do so to achieve fairness for all developers, both first party and third party, but was still worried about the costs.
His YouTube comments are from a January 2022 deposition, not the original 2021 one I mentioned earlier.
A Google developer advocate, Reto Maier, in July 2009:
I was wondering why we made this change? I’m worried that I can no longer say ‘Google doesn’t take a cut, we just cover our transaction costs’. Why not give developers more and pressure carriers to reduce the cut?
I missed who wrote this one, apologies:
We have previously said that we don’t make money from Market, we are now lying. Let me repeat that, we are now lying to our developers by not making this change public (for 6 months now!)
Google’s public blog post in October 2008 introducing the Android Market explicitly stated that “Google does not take a percentage.” I’m not completely clear if Google was already taking 5 percent at that time.
Rubin’s 70/30 rev share decree came as a surprise — because it was already sharing 95 percent in some regions.
“As requested (re Eric Chu) we have changed the default developer revenue share from 95% to 70%. This is live in production now,” reads a June 2009 email.
Some employees thought Google was Being Evil (back when its motto was Don’t Be Evil) and protested the decision in internal emails. (That’s two bingo card stamps right now, if you’re keeping track.)
Here’s how Android engineer, Jean-Baptiste Queru, reacted in an email:
As an outside developer, I’d mostly think “evil”. It’s hard to justify the storyline that we’re trying to change the mobile industry if the reality is that the mobile industry is changing us. I hope that Google is ready to defend that new position in public as things could get ugly once people find out.”
We just saw an 2009 email where Android co-founder Andy Rubin told early app store boss Eric Chu that Google wouldn’t just keep a “processing fee” when carriers weren’t part of the equation — it would keep the extra 25 percent it was promising to carriers, too.
It’s not a discussion between Rubin and Chu, at least not in this part of the email thread. Chu asks, and Rubin replies: “70/30 worldwide.”
Rubin makes it even clearer in another equally blunt email:
70% to developers
30% to Google
Says Chu, the original Android app store boss:
Back then, many of the major carriers had their own stores. They get to promote, and they also make money off of the store — of their store, I should say. And so this is to try to give them an alternative that allowed them to monetize even with Android Market — to convince them to adopt a new market.
The carriers would compete with Android Market?
“That was part of the design. It has always ben an intention, as part of Android, to enable other stores” and other ways to download apps, he testified.
Chu says the original Android Market rev share was 70/25/5: “70 percent to developers, 25 percent to carriers, and Google kept 5 percent.”
In an FAQ he drafted for the Android Market in 2008, he wrote “Google will not be operating the Android Market as a profit center” and “Google will collect a small charge to cover costs of handling and billing.”
We learned earlier today that, in 2020, Google internally claimed that Google Play had become one of the most profitable businesses in the world and key to Android P&L — literally a profit center for Google.
In a blog post he drafted that year, he wrote: “Developers will get 70% of the revenue from each purchase; the remaining amount goes to carriers and billing settlement fees — nothing goes to Google.” But according to an email we just saw, Google decided it should take 5 percent for processing fees.
We’re back from lunch, and instead of hearing from Android boss Hiroshi Lockheimer next, Epic is playing a December 2021 video deposition from Eric Chu, a former Google head of Android ecosystem who ran the Android Market before it became Google Play. He was succeeded by Jamie Rosenberg, who we heard from the other day.
He left Google for Meta / Facebook.
After dismissing the jury, Judge James Donato had some pointed questions for Google CEO Sundar Pichai about preserving evidence, most prominently:
Is it your understanding that from 2008 through today and every day in-between, it had been Google’s policy to let each individual employee who was subject to a litigation hold to decide whether or not to preserve a chat?
Pichai answered yes. Outside of some recent changes, “The employees have to make the decision.”
What were the changes? “My understanding is we change the chat to be default-on now for all Googlers.”
“So it’s done a 180, the default now is on for all employees unless someone opts out?” Yes, as of Q1 of this year.
We’re going on lunch — and Pichai is done being a witness. We might come back with Android boss Hiroshi Lockheimer.
“I typically use Google chat for administrative purposes, for scheduling purposes; I don’t engage in substantive discussions on matters related to all of this.”
Someone might ping him to schedule a meeting on a related topic, he suggests, but he wouldn’t discuss it there.
He could not swear in court that he’d never, ever chatted on a substantive topic. “Not that I recall,” he says.
“Are you aware that Google produced 8 chats total with you as a participant?” asked Epic lawyer Moskowitz.
“I was not aware of that,” he says.