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Sean Hollister

Sean Hollister

Senior Editor

Senior Editor

    More From Sean Hollister

    Sean Hollister
    Sean Hollister
    More quotes I spotted in Google’s “Project Elektra” documents.

    Phil Harrison, July 15th, 2018, “Strategic Rationale”:

    I‘ve taken a stab at a high-level strategic rationale for an investment in Epic.

    Fortnite is (or can be) the leading business driver for Google across:

    YouTube (already 100M+ increase in game watch time MAU)

    GCP (to shift 130M+ players from AWS and build an anchor tenant in games)

    Yeti (Fortnite + Unreal Engine support for all games)

    [email continues]

    July 16th, 2018, in a reply from Dave Sobota:

    As a potential alternative, Phil is proposing we consider approaching Tencent to either (a) buy Epic shares from Tencent to get more control over Epic (unclear how that helps us without a majority share) or (b) join up with Tencent to buy 100% of Epic (and then of course we do a lot of deep commercial things with Epic).

    The direct investment route had Google internally proposing to invest ~$2B in exchange for a ~20 percent stake of Epic. Google wrote: “Will require a substantial investment to gain influence.”

    The Tencent / controlling interest route sounded very tentative:

    The company may be open to a second large strategic investor as a counterweight to Tencent

    Tencent may not be willing to sell shares, or may seek to block another strategic investor (investor rights unknown)

    Update: Fixed typo and added a line about “Yeti” that I missed copying over.

    Sean Hollister
    Sean Hollister
    Project Elektra: “Anything short of a control stake will limit Google’s ability to influence the company’s trajectory.”

    We’re now seeing the genesis of “Project Elektra” — which appears to be Google straight-up admitting in internal emails and presentations that it wanted to buy enough of Epic Games to make Fortnite a centerpiece of Android, partnering with Epic games stakeholder Tencent to do so if necessary.

    “Investment was the only way people could realistically think of to sway them on Epic’s approach to Android,” reads part of an email from Google’s Don Harrison.

    Here’s the full email from July 16, 2018:

    We are bringing a package offering to BC on Thursday re Epic. Spoke to Jamie and I think we need a couple pages about what investment could look like and someone there to discuss (based on whatever we can glean publicly). We just did a prep call and investment was the only way people could realistically think of to sway them on Epic’s approach to Android — because it’s easy to imagine us investing billions at some ridiculous valuation (for everyone except for the corpdev folks).

    Sean Hollister
    Sean Hollister
    Tim isn’t going first — Epic has called Don Harrison, Google’s president of global partnerships.

    He reports to Google’s chief business officer Philipp Schindler, who, in turn, reports to Google CEO Sundar Pichai. Schindler would have been personally required to approve the $147M offer to Epic.

    Pichai would not, but we’re seeing an email from 2018 where he suggested that Philipp, Sundar, Ruth [Porat, Google’s CFO], and Kent [Walker, Google’s CLO] should be involved in a broad discussion about the investment.

    Sean Hollister
    Sean Hollister
    Google’s sweetheart deal with Spotify: some of those secret numbers may be revealed during the Epic trial.

    Judge James Donato has just decided that while he’ll allow some of Spotify’s secret numbers to be sealed, he won’t seal them all — in fact, I’m pretty sure he just said the specific rates Spotify negotiated with Google will not be sealed.

    Those numbers were one of the first big dramatic moments in the trial:

    Sean Hollister
    Sean Hollister
    We’re back with Epic v. Google day nine — will Epic Games CEO Tim Sweeney take the stand?

    I see Sweeney here in his usual spot in the courtroom. He was scheduled to appear last Thursday — instead, a protest on the Bay Bridge wound up postponing his appearance.

    Epic will likely call him to the stand today.

    Sean Hollister
    Sean Hollister
    Google is asking to see the full details of what Epic wants to do about potentially destroyed evidence before it comes up with a counter-proposal.

    The judge has not decided either way — he says he’ll see us back here on Monday. I’ll see you back here then, too!

    Sean Hollister
    Sean Hollister
    Judge Donato has dismissed Google’s Kent Walker. “What are we going to do about this?” he asks.

    It feels like the judge has made up his mind to some degree. He’s asking Epic what it believes would be a sufficient remedy, and Epic is asking for a mandatory jury instruction.

    In September, Epic had simply proposed a “permissive” jury instruction: “that the jury may, if it chooses, infer that the evidence Google destroyed would have been harmful to Google’s case and helpful to Plaintiffs’ cases.”

    But Judge Donato is not 100 percent sure what good the mandatory instruction will do.

    Sean Hollister
    Sean Hollister
    “We hope to catch that kind of mistake during our normal discovery review.”

    A point Walker tried to make to Epic but is now making more freely under Google’s more friendly questioning: he believes Google’s normal process should catch any “fake privilege” attempts.

    “Sometimes they just make mistakes,” Walker says of Google’s business employees. “They think of the word privileged as similar to confidential, but we try to catch that during the discovery process.”

    “We produce more documents than any company I can think of,” he says.

    Sean Hollister
    Sean Hollister
    “You of all people should have known that there was no excuse for not preserving chats,” Judge Donato tells Google’s chief legal officer.

    “When you go out to dinner, it doesn’t matter what’s printed on the menu, it matters what the kitchen puts on the plate. What is the discovery that was or wasn’t put on the plate?”

    Judge Donato is not happy. Google tried to point out the passage Epic didn’t, but the judge cut Google short.

    Donato says Google should have made employees live up to the company’s obligations and “ensure employees that were having communications substantive to a case not be given undue discretion not to preserve them.”