Epic Games, the developer of “Fortnite” on Thursday unsealed details about contracts it alleges Alphabet Inc’s Google signed with phone makers and other top video game companies to avoid losing $1.1 billion in annual app store profit.
In 2018, Epic Games launched “Fortnite” through its website and a partnership with handset maker Samsung Electronics Co (005930.KS), bypassing Google‘s Play Store, which charges developers fees of up to 30 percent of their sales.
However, Google feared that other companies would copy Epic Games and blocked that possibility by erecting unlawful hurdles. Epic alleged in an antitrust lawsuit filed against Google last year.
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Google said the lawsuit remains baseless and mischaracterizes business conversations. A trial has not been scheduled.
Among new details a judge ordered be unredacted. In 2019, Google estimated up to $6 billion in Play revenue and $1.1 billion in profit would be at risk in 2022 alone if Epic’s approach spread and alternative stores found success.
But Google avoided the feared hit.
Later the same year, it launched “Premier Device Program” to pay phone makers to ensure the Play Store’s exclusivity and limit the appeal of partnerships similar to what Epic had reached with Samsung.
According to the filing, Premier partners received as many as 12 percent of Google’s search revenues from their phones, compared with 8 per cent traditionally. Some partners, including LG Electronics Inc (066570.KS) and Lenovo Group’s Motorola (0992.HK), also received 3 to 6 percent of Google “Play spend”.
Google, as part of an effort dubbed “Project Hug” approved spending “hundreds of millions of dollars” on over 20 top developers in marketing and other benefits to keep them on the Play Store. The “vast majority” accepted Google’s offer by December 2020.