Google’s Paul Gennai was dismissed just before lunch, and we’re now hearing from Epic’s marketing chief — but he’s Google’s witness, which means Google is asking the questions, which means we’re not starting with pleasantries.
Google has just asked about Fortnite’s low retention of players on mobile — a point I myself brought up the other day.
In a March 26th, 2019, email from Google’s Paul Gennai to Atul Kumar (bolding mine):
In terms of the Samsung proposal, a few thoughts:
I realize that Jim noted a $50M a year number, but it’d be helpful to put that into perspective. What would that be in terms rev-share number, recognizing we might prefer to hide it in some way?
Note that I do think that a rev-share would be better at disincentivizing other app stores from being preloaded (given it’d defray revenues), which is why I liked the idea of offering a rev-share across Search and Play, but not breaking out the figures in our accounting to them.
I’m confused on the homescreen exclusivity part. If they’re distributing via Play, is the fight to have them remove Galaxy Store from the homescreen really worth fighting? I can see them digging in here and I’m not sure it’s worth us being tied to it.
Google did wind up doing the revenue sharing arrangements with RSA 3.0. Wouldn’t companies have to factor in this lost revenue share before preloading another store? asked Epic. “Yes, another app store would have to compete on a similar basis,” said Gennai.
We’re going to lunch now.
Epic just showed us an internal Google proposal document from May 23rd, 2016, where it was figuring out its “next steps with Samsung.”
Within that document, there’s a list of what “Google Gets” and what “Samsung Gets” for each of the proposed items.
One of those proposed items was “Samsung Zone in Play replaces Galaxy Store.”
The “Google Gets” field reads: “No Galaxy Store.”
The “Samsung Gets” field reads: “Stop wasting resources on Galaxy Store.”
Epic’s attorney summed up: so, there was an offer for Google to pay Samsung $50 million a year to close the Galaxy Store?
Gennai said he didn’t recall it like that. “I recall it being a separate storefront that would use Google Play infrastructure.”
That’s Google’s Paul Gennai, who pushed back reasonably well against Epic’s assertion that these were so secret as to be illicit. “I don’t think Google publishes most commercial relationships with companies,” he said.
When he pointed out that most companies in Hug deals “continue to pay the published rate,” though, Epic leapt at that.
“Yes, exactly, they just got millions and millions of dollars on the side.”
Gennai protested that those companies work with Google.
“To the tune of millions of dollars in cash and prizes,” asserted Moskowitz.
“I don’t know the numbers,” replied Gennai.
We’re looking at Gennai’s big document again, the one Judge Donato said would magically change, and I’m pleased to say I have now copied down a huge chunk in full for your reading pleasure.
Epic’s lawyer is asking a variety of questions about various passages, but the most compelling ones were these:
Was “contagion” the driver behind Project Hug?
“Yes, we did not want the loss of titles from Google Play to start a chain reaction of more and more titles on Google Play leaving.”
Was Google worried about losing them to other competing app distribution mechanisms on Android?
“They could just leave Android entirely and keep focusing on iOS.”
Would a developer like Activision Blizzard King just up and abandon Android’s billions of users?
“They can use it as a threat. We didn’t see it,” says Gennai.
January 11th, 2019, in an email from Gennai to a “Sri” who’s being tasked with a big project:
The project that Mike will talk to you about is our biggest Play priority for Q1, but one that we don’t have the resources to staff (our Play strategy team had a lot of departures into the business).
Essentially, Jamie and Sameer are asking us to consider what Play should do in the face of increasing app store competition on Android, both from OEMs (who are looking to increase services revenue / differentiate devices with content) and other large platforms (like Epic). In that context, they’re willing to consider all options, including changes to our business model, considering paying our OEMs and carrier partners, and more.
We see it as two phases: setting the scene for why it’s important (some scenarios for impact on Play, Android and Google), then onto solution design.
It’s a huge project and one where we’d definitely appreciate the help. Jamie and Sameer have already confirmed they can allocate an hour every other week to keep track of progress and make decisions.
Two impressive questions from Epic attorney Moskowitz:
“During that time the App Store was charging this lower fee and Google wasn’t, you’re not aware of a single developer that pulled out of the Play Store because of this differential pricing?”
And, about the “loophole” where some developers were able to pay 0 percent because they hadn’t adopted Google Play Billing: “Are you aware of any developer that abandoned iOS and came over to Android exclusively?”
He wasn’t aware of either. Epic’s implication is that Google didn’t truly compete with Apple on app store pricing. (Google, mind you, often argues it competes for consumer purchases of phones instead.)
Why did Google seemingly sit on its hands for well over a year after Apple dropped its App Store fee for subscriptions, before eventually matching that rate? That’s what Epic is pushing Gennai to explain on the stand, and the answers aren’t clear.
Google’s primary answer so far is that these things take time, but we’re seeing internal Google executive summaries that at least suggest Google was taking that time intentionally.
I haven’t seen any proof Google was being greedy, but it did seem worried about how developers would react: one executive summary of a meeting between top Play Store execs shows they were so concerned with the “Spotify plan” that changing the Play Store policy seemingly hinged on Spotify.
“Make go-no go pending Spotify status” was listed as a recommendation right under “Change rev share to 30(3mo/15)” and “Change policy for all (with risk mitigation measures and exceptions).” I wonder what those exceptions were.
“We can’t count it accurately,” says Gennai.
“In the order of magnitude, it’s reliable, but I can’t attest to it being correct.”
Even so, at least one Google internal document suggested that switching wasn’t common. “While the number of OS switchers is small, those that switched to iOS tend to be younger and live in urban areas,” reads one line that Epic highlighted for the jury.
“There is more switching behavior between Android OEMs than churn to iOS,” reads another.
In March 2021, a Google document shows 22 percent of Apple iOS users were listed as considering another OS, but only 9 percent were listed as intending to switch, with actual switchers labeled TBD.
For Android, it was 17 percent considering another OS, just 7 percent intending to switch, and again, TBD on actual switching. Google has already argued that small percents of billions add up to big numbers.
“If I love Gmail, and I do, and if I love Google Maps — and I really do — I can buy an Android or an iPhone.”
Gennai says that’s correct.
“You understand that Google makes money off those apps on iPhone?”
“In some instances,” he says.
(I missed what she was driving at this time, I’m afraid, just thought I’d share an interesting moment in the room.)