More from Epic v. Google: everything we learned in Fortnite court
A couple snippets of emails:
“I’m guessing the Vudu app uses its own billing so we’d be inconsistent if we pushed [DirecTV] to something different on policy grounds.”
“I fear that [YouTube] is trying to find reasons not to use Play’s in-app billing for its premium services [...] this is not about money or control, it puts us in a difficult position with our third-party ecosystem if we have a first-party app that doesn’t use Play billing.”
Epic’s attorney suggests YouTube didn’t migrate to Google Play Billing until after Epic’s Fortnite lawsuit. Google concedes it didn’t migrate until after its (post-lawsuit) policy change, which mandated Play Billing for apps thereafter.
We’re looking at an email chain from late August 2013, where Google Play head Jamie Rosenberg is telling his subordinate Kochikar that he doesn’t want it public that Google would “pay” partners to use its billing system, among other things.
Later in the email:
I would rather tell WSJ that we *can’t* put this in writing exactly because we are doing something for them that we would NOT make available to all partners. Again, I’m happy to deliver that message to the highest levels. We have a large and sweeping partnership with NewsCorp on may fronts and we would not disrupt that partnership by falling down on our promises.
The context was a deal with News Corp for The Wall Street Journal to integrate Google’s subscription billing services at a 30 percent rev share, it seems.
Google Plus integration was another thing Google would apparently “pay” for at the time.
Correction: 2013, not 2023. I typo’d.
He’s not with Google Play anymore but says he still works “with a number of leaders across the company on leadership development and coaching.”
He was Kochikar’s boss and Kolotouros’ boss — the latter seemed to be quite angry with him at one time. Time to hear about the early days of Google Play Billing, it seems.
Epic CEO Tim Sweeney has only missed one day so far. Google / Alphabet CEO Sundar Pichai won’t be here till Tuesday (tomorrow).
We’re on lunch break, waiting for the courtroom to reopen.
That’s Kolotouros’ estimate of how many new Android phones are part of the RSA 3.0 Premier tier — and thus not only have to have Google Play (and many other Google apps) preloaded but cannot preinstall any app that competes with those Google apps. Apparently, that included the Epic Games Store.
CHATS! Everybody drink.
We may need to make a CHATS T-shirt, like the EMAILS one we used to sell.
(Kolotouros could not swear to it but said he could not recall sending any chats relevant to the legal case during that period.)
Once again, Epic attorney Lauren Moskowitz points out that Google’s slides about the need to have Play compete / protect itself from other app stores do not mention Apple anywhere, cutting at the heart of Google’s argument.
(She’s going through slide after slide, slide deck after slide deck, with Kolotouros, and he’s saying yes, Apple is not mentioned.)
“Oneplus Execs reached out today [...] this is OnePlus-initated request for sustainable long term growth,” reads part of an internal Google email about OnePlus’ decision not to preinstall the app.
Epic’s attorney made this sound like a forced / bribed choice, and while that’s still within the realm of possibility based on what we’ve heard, it seems more complicated than that.
Google also says that OEMs can put some phones in its Premier tier (eligible for full rev share) and other phones in a different tier — and that 95 percent of Android phones in the US are not part of the Premier tier, so nothing prevents them from preloading a non-Google app store on those phones if they wanted to.
Something I missed this AM but confirmed with three sources: Judge Donato is not at all happy with Google about the testimony of its employees (including lawyers!) in the courtroom — as Epic has increasingly shown they ignored or joked or seemed unaware of their obligations to preserve evidence.
So unhappy that he’s considering a mandatory jury instruction — which might tell the jury not to trust Google as much as they otherwise might — unless Google’s chief legal officer Kent Walker shows up Thursday at 3PM PT and can properly explain this mess.
Kolotouros told Google lead attorney Glenn Pomerantz:
➼ Offering Android for free helps Google compete with Apple because other companies can focus on building the hardware and apps instead of a whole operating system
➼ MADA includes tools that help devs make higher-quality apps
➼ Google’s APIs ensure apps are working as users expect
➼ These contracts make sure OEMs give you bimonthly security updates — “no less than 6 security updates in a calendar year.”
Google also pointed out that companies beyond Epic have managed to get their apps preinstalled on Android phones, like Facebook and LinkedIn. I now wonder what Meta, Microsoft, and OEMs paid or gave up for that to happen.
It’s Google’s turn to question its VP of Android platform partnerships, and as usual, it’s focused on explaining to the jury why all these payments and contracts make sense if you’re trying to compete with the iPhone. This specific Kolotouros answer was to a question about what would happen if an Android app didn’t have Google’s contractually required apps out of the box.
I’m receptive to this argument: we at The Verge have decried fragmentation and bloatware for years, often asking why OEMs insist on reinventing the wheel by bundling apps that perform worse than the de facto platform defaults. But I didn’t know Google paid so much to keep it from being so.
While Jim Kolotouros’ chat history may have been deleted, his disgruntled comment-filled notepad file has been shared in court.
Comments include:
“Lack of honesty at Android leadership. Lie to your face and stab you in the back.”
“I am loyal to Google; not any person”
“Andy Rubin culture is rampant; but more passive aggressive, and not out in the open”
“Why am I doing this? To protect Joan the billionaire?”
“Why am I defending these people?”
He also mentions protecting “Jamie,” who we’ve heard is his boss, Jamie Rosenberg... and who just so happens to be testifying after him in court today.
“That is right,” answers Kolotouros. Sounds familiar. Wonder how Google is going to explain all this potentially deleted evidence to the jury in a way that sticks. So far, it hasn’t done a great job.
“That was Samsung’s frame, that is correct,” says Kolotouros.
Samsung’s counteroffer included: “Utilize Google IAP as the main payment module on Galaxy Store.” Samsung was willing to give Google a cut of in-app purchases, that means.
Instead, Google did three other deals with Samsung in 2020 worth $8 billion, Kolotouros agreed. We didn’t get all the details.
“Play Store will still be distributed and placed on the default home screen for all devices via the MADA, but there is room for Samsung to also add the Galaxy Store,” reads an executive summary. “This saves us $1.0B over 4 years.”
Yes, says Kolotouros.
That’s why, in February 2019, Google proposed Project Banyan, aka “How do we continue to keep Play as the preeminent distribution platform for Android?” Or at least that’s the first page of a slide deck about Banyan.
It was a short-lived attempt: after Samsung’s June 2019 counteroffer, Google gave up on it, Kolotouros says.
And Google didn’t grant it. OnePlus would have had to give up substantial Google revenue share just to ship phones with the Epic Games Store / Fortnite launcher app needed to install the game.
“They needed permission in form of a waiver from Google to do this, yes?” Yes, answered Kolotouros. The only way to preload was to give up its Premier rev share, he agreed.
20 percent of “net basic ad revenue”
10 percent of “net optimized ad revenue”
5 percent of “net optimized Play transaction revenue”
15 percent of “net premier ad revenue”
20 percent of “net Play transaction revenue”
This is from Google and OnePlus’ RSA 3.0 agreement.
As part of an executive summary titled “We are fine-tuning Android Search Rev share (ex Samsung) to protect Google from key strategic risks),” Google CFO Ruth Porat and others were presented with this ask:
Ask: Spend $2.9B in total in 2020 (+141M to status quo) growing to $4.5B (+$600M) in 2023 across Search and Play for carriers and non-Samsung OEMs to secure platform protections for Search, and Play and critical apps protections on more devices
Google planned to specifically offer revenue to phone manufacturers to “secure Play exclusivity,” among other things:
*Offer up to 16% Play rev share to OEMs (16% to key CN OEMs, 4-8% to smaller OEMs) spending est. $35M 2020 and up to $224M in 2023 (steady state) in addition to the bonus tier of current RSA to secure Play exclusivity, Android upgrades, and distribution for critical apps (Comms suite, Pay, Photos, Gmail, Gcal, Discover suite)
And as we’re seeing now, Google went through with these deals, calling them RSA 3.0.
Tanuj Raja, Google’s global director of strategic partnerships, said it was “just his two cents” that a new Google strategy to contractually obligate Google apps might ensure “less consumer experience fragmentation” and help “stem the tide of emerging app stores,” he concluded in a July 2nd, 2014, email.
Jim Kolotouros, who’s currently on the stand, suggested it wasn’t just Raja’s two cents in a follow-up email — that it was a good idea and that Raja’s “last paragraph is the key.”
James Kolotouros, VP of Android platform partnerships, says yes. But not every phone comes with an alternative app store, he concedes.
(He’s slightly wrong, as far as we’re aware: Huawei still sells some phones outside China.)
We’re live from day 5 of Fortnite court in the Epic v. Google trial:
We’re back with a new witness: James Kolotouros, VP of Android platform partnerships. Google attorney Lauren Moskowitz is using him right away to establish one key thing: Google contractually requires every Android device manufacturer to preinstall the Google Play app store on every phone that uses its core APIs — and place it on the default homescreen and keep users from deleting it.
That contract is called a MADA: Mobile Application Distribution Agreement.
“Google requires Google Play to be on the default homescreen, as opposed to any other homescreen, because users are more likely to see it and use it than when it’s on any other homescreen, yes?”
Yes, Kolotouros agrees.
Google offered Netflix 10 percent instead of 15 percent in September 2017 — and Netflix rejected it. I have to catch a train, but I’ll explain more later.
We’ll be back Monday.
