Judge Questions Epic Games and Google’s Settlement
A judge is raising doubts about whether Epic Games and Google are settling their ongoing antitrust dispute due to a newly revealed partnership related to the Unreal Engine, Fortnite, and Android. During a hearing in San Francisco, it became public that Epic and Google have entered a new agreement that appears to incorporate “joint product development, marketing commitments, and partnerships.” California District Judge James Donato expressed concern that this deal—where Epic would assist Google in promoting Android and Google would leverage Epic’s core technology—might have influenced Epic to moderate its requests for changes in the Android ecosystem.
Details of the Partnership Shrouded in Secrecy
While Judge Donato permitted Epic and Google to keep most agreement specifics confidential, he interrogated witnesses, including Epic CEO Tim Sweeney and economics expert Doug Bernheim, about its potential effects on settlement discussions, hinting at key details. Donato asked Bernheim, “You will be helping Google market Android, and they will promote Fortnite; that agreement isn’t in place today, right?” Bernheim confirmed, characterizing it as a “new business collaboration between Epic and Google.”
Insights from Tim Sweeney
Further insights were provided by Sweeney, who referred to the partnership as connected to the “metaverse,” a term he uses to describe Epic’s game Fortnite. He mentioned that many companies in Google’s operational field utilize Epic’s technology to enhance their products, implying that Google’s expanded use of the Unreal Engine would be quite significant.
Financial Aspects of the Agreement
Judge Donato quantified a facet of the partnership, stating, “An $800 million investment over six years is a notable partnership.” It was revealed that this refers to Epic investing $800 million for certain services from Google, with Sweeney noting, “This year, we have opted to use Google at market rates.” However, Sweeney clarified that Epic and Google are not co-developing a single product, but are independently creating product lines.
Concerns Over Potential Conflicts
Donato appeared wary of the partnership, questioning whether it could represent a “quid pro quo,” potentially diminishing Epic’s motivation to advocate for terms favorable to other developers. Currently, Epic supports a settlement proposing that Google cut its standard app store fees globally and permit alternative app stores to register for simpler installation on Android.
Sweeney’s Stance on Competition
Sweeney rejected the idea that Epic might be easing its demands due to financial incentives, asserting, “I don’t find it unethical for Epic to pay Google to foster greater competition than they have allowed historically.” He emphasized that the agreement signifies a considerable value transfer from Epic to Google, ensuring that the Epic Games Store will not receive any preferential treatment under this partnership.
Looking Forward
It seems that the settlement is intertwined with the business arrangement. Judge Donato hinted that Epic and Google would only finalize the deal if the settlement proceeds. Sweeney acknowledged that exact terms have yet to be finalized but expressed his expectation that they would materialize. He informed the judge that he views the settlement and partnership as crucial for Epic’s future growth strategy.
