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Epic Games says Google paid phone and game makers to avoid US$1-billion app store hit

Epic Games says Google paid phone and game makers to avoid US$1-billion app store hit

The Epic Games logo, maker of the popular video game Fortnite, is pictured on a screen in this picture illustration Aug 14, 2020. (Photo: REUTERS/Brendan McDermid)

NEW YORK: Fortnite developer Epic Games on Thursday unsealed details about contracts it alleges Alphabet's Google signed with phone makers and other top video game companies to avoid losing US$1.1 billion in annual app store profit.

Epic in 2018 launched Fortnite through its website and a partnership with handset maker Samsung Electronics, bypassing Google's Play Store, which charges developers fees of up to 30 per cent of their sales.

Google feared other companies copying Epic and blocked that possibility by erecting unlawful hurdles, Epic alleged in an antitrust lawsuit filed against Google last year.

Google said the lawsuit remains baseless and mischaracterises business conversations. A trial has not been scheduled.

Among new details a judge ordered be unredacted, Google in 2019 estimated up to US$6 billion in Play revenue and US$1.1 billion in profit would be at risk in 2022 alone if Epic's approach spread and alternative stores found success, according to the lawsuit.

But Google avoided the feared hit.

In 2019, 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 newly released details.

Premier partners received 12 per cent of Google's search revenues from their phones, compared with 8per cent traditionally, according to the filing. Some partners, including LG Electronics Inc and Lenovo Group's Motorola, also received 3 per cent to 6 per cent of Google "Play spend."

Separately, Google in 2019 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, according to the details. The "vast majority" accepted Google's offer by December 2020.

According to the lawsuit, Google internally called the new deals a success in stopping a "contagion" of developers sidestepping the Play Store.

Source: Reuters

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