Google-Epic Settlement Faces Scrutiny Amid $800M Partnership Disclosure
A proposed settlement between Google and Epic Games, aimed at resolving claims regarding Google's Android app store practices, is currently undergoing review by U.S. District Judge James Donato. Recent court proceedings have brought to light a newly disclosed business partnership between the two companies, valued at $800 million over six years, prompting intense judicial scrutiny concerning its potential impact on the settlement's terms.
Judicial Review Intensifies
Judge Donato is meticulously evaluating the proposed settlement, which was initially announced in November. The judge had previously voiced skepticism regarding the settlement and the collaboration between Google and Epic, leading to requests for further explanation from key individuals involved.
Those present for the recent court discussions included Epic CEO Tim Sweeney, Google Android boss Sameer Samat, Epic's economic expert witness Doug Bernheim, and Google regulatory affairs director Lara Kollios. Both Epic and Google have been operating as though the settlement is finalized, exemplified by Fortnite's return to Android and their public statements of mutual support.
Proposed Settlement Outlined
The proposed settlement offers two main options for Judge Donato's consideration. If approved, Google would implement reductions in global app store fees and establish a "Registered App Stores" program. This program is designed to facilitate the operation of rival app stores on Android, although these stores might remain subject to Google's oversight and various fees.
Should the settlement be rejected, Google's alternative proposal involves developers enrolling in new Google programs to bypass Google's standard payment systems. This alternative would impose per-app download fees on developers, offering what are described as slightly reduced app store fees.
New Partnership Details Emerge
During the ongoing legal proceedings, a new, confidential business agreement between Epic Games and Google was revealed. This partnership reportedly includes "joint product development, joint marketing commitment, and joint partnerships" focused on Unreal Engine, Fortnite, and the Android ecosystem.
Judge Donato indicated that the agreement would involve Epic assisting Google in marketing Android, and Google utilizing Epic's core technology, such as the Unreal Engine. Epic CEO Tim Sweeney linked the agreement to the "metaverse," clarifying that the deal entails Epic spending $800 million over six years to purchase services from Google at market rates. He stated that Google and Epic are each developing separate product lines, despite language in a term sheet suggesting they would "work together."
Judicial Concerns and Company Responses
Judge Donato expressed concerns that this newly disclosed partnership might have influenced Epic to moderate its demands for broader changes within the Android ecosystem. The judge questioned whether the deal could constitute a "quid pro quo" that might diminish Epic's motivation to advocate for terms beneficial to other developers.
Epic CEO Tim Sweeney countered any suggestion that Epic was being compensated to soften its terms, emphasizing that Epic is the party making payments to Google.
Sweeney stated that he did not perceive "anything crooked about Epic paying Google off to encourage much more robust competition than they've allowed in the past."
He also affirmed that the Epic Games Store would not receive preferential treatment from Android under this new agreement. Sweeney described the settlement and the associated deal as "an important part of Epic's growth plan for the future."
The settlement arrangement is understood to be contingent on the finalization of this business deal.