SAN FRANCISCO (CN) — On the ninth day of a massive antitrust trial in San Francisco, Epic Games CEO Tim Sweeney took the stand and explained why he willfully disregarded Google’s in-app purchase policy in 2020.
In 2020, Epic Games released a hotfix for the hit game Fortnite on Android that allowed users to pay for Fortnite items directly through Epic at a discount, rather than Google’s Play Store. Sweeney said the Google Play Store took a 30% cut of any in-app purchase and he preferred to offer customers the chance to purchase items directly from Epic.
Google responded by removing the game from the Google Play store. Epic sued later that day, claiming Google operated a monopoly over app stores on Android.
Sweeney said he told Google in 2018 that he planned to release Fortnite on Android outside of the Google Play Store. He told Epic lawyer Gary Bornstein that Google was not pleased to hear this, and called him to its Mountain View, California, headquarters for a meeting with senior executives.
At that meeting, Google execs offered Epic a deal to release Fortnite through Google Play. Rather than waive the 30% fee, Google offered “side deals” to compensate Epic in other ways, such as sponsorships and ad revenue. Sweeney called the deals “crooked.”
“It seemed designed to convince Epic to not compete with [Google] in stores… And to look to the outside world like we agreed to their 30% terms,” Sweeney testified.
Sweeney did not accept the side deal, he said, but eventually decided to release the game on Google Play later in 2018. Still, he said he had plans to go around Google’s Play Store eventually, since he didn’t believe the Play Store policies were binding.
“I understood that when we launched the hotfix, it would be in violation of Google Play policies,” Sweeney said.
Sweeney said he believed Google’s policies were ambiguous because companies like Spotify had sweetheart deals with Google and did not pay fees to Google for in-app purchases.
Earlier Monday, Google president of global partnerships & corporate development Don Harrison acknowledged under questioning by Epic lawyers that Spotify paid nothing to Google if users bought services through Spotify’s payment system, and paid only 4% if customers used Google Play Billing. Epic’s lawyers framed this as a clear double standard.
Sweeney, however, said that it wasn’t only financial reasons that led him to bypass Google’s payment policy; he also wanted an open platform for app and game developers to choose how they wanted to offer their products to customers, giving customers a better deal. Sweeney said he credited Epic’s success with the ability to offer items directly to consumers, something he said the company has been doing since 1991.
On cross-examination, Google lawyer Jonathan Kravis spent the afternoon painting Sweeney’s actions as hypocritical to the jury.
“Mr. Sweeney, you testified that you’re not seeking damages, but your company would make hundreds of millions of dollars from the arrangement you see on this screen, right?” Kravis asked while showing an exhibit of a purchasing system where users pay more to use Google Play Billing.
Sweeney laughed and said, “I think it would be billions of dollars!”
Earlier, Sweeney acknowledged that as long as the Google Play Price was even a little bit higher, more people would choose to use Epic’s payment, meaning Google would get nothing — an arrangement that Sweeney said would be “awesome.”
Kravis also noted Epic accepts the 30% fee from Sony, Nintendo and Microsoft, and none of those companies allow competing app stores like Google does.
“Epic still makes plenty of money on consoles, right?” Kravis said.
Sweeney replied that Epic is currently losing money, but Kravis said that Epic has earned $12 billion from Sony, Microsoft and Nintendo since Fortnite launched in 2017.
Kravis suggested Sweeney was trying to have it both ways; he pointed out that Fortnite makes money from a small number of users who purchase in-app items. These players subsidize those players who do not purchase in-app content, known as a “freemium” model.
The Google Play store uses the same model to justify its 30% fee.
Earlier in the day, Harrison told Google lawyer Glenn Pomerantz that Sweeney objected to the 30% fee when Epic was negotiating with Google to get the game on Android, but ultimately promised that he would abide by the policy.
Sweeney said he never told Google he planned to defy the policy until after the hotfix went live.
When asked how he reacted to Sweeny defying Google policies, Harrison said, “I was surprised because it seemed we had an agreement to move forward, Disappointing, a waste of time.”
Harrison previously testified that Google originally wanted to purchase a controlling stake in Epic because the company considered it a “risk” for the game to launch outside of Google Play. Epic’s lawyers claimed this was an attempt by Google to ensure Epic would not compete and pointed to a similar deal that Google signed with Activision Blizzard.
The deal with Activision was about getting Activision’s games on to the Android platform, and were not evidence of any collusion, Harrison said, adding Activision is still free to open its own app store if it wishes.
“They were free when we signed the deal; they’re free today,” Harrison said.
This week’s testimony wraps up Tuesday, before continuing Nov. 27 after the Thanksgiving break.
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