Epic Games chief concerned Google will ‘get away’ with app store charges

The chief executive of Epic Games is concerned that Google will “get away” with keeping high charges around its app store, despite the Fortnite maker winning a stunning legal victory over the tech giant over the issue this week.

Tim Sweeney told the Financial Times he was worried Google would offer “fake” remedies to the Californian court that on Monday found the search company was abusing an alleged monopoly over the Android app ecosystem.

In the landmark US case, Epic accused Google of cutting deals with smartphone manufacturers, network operators and game developers to shut down alternatives to its Play Store on Android devices.

Epic said the agreements allowed the company to draw an excessive 30 per cent commission fee on digital purchases through a mandatory payment method, which it argued would not be so high if Google were exposed to more competition. The court will next decide how the search giant must change its business to comply with the jury’s verdict.

“My gravest concern in all of this is Google really genuinely thinks that they are going to get away with continuing their scheme,” Sweeney said.

He said he was concerned Google might seek to allow alternative payment methods, but then charge developers a close to 30 per cent cut of their revenues to use the Play Store. That move would in effect remove the incentive to drop Google’s billing.

The judge in the case has already ruled out trying to “micromanage” Google’s commission fees. A settlement with US state attorneys-general should soon be made public and will show the concessions Google has already agreed to make around its store.

“My concern with the state settlement, which I am not privy to, is that it will restore a fake form of competition which doesn’t actually give consumers the benefits of real competition,” Sweeney said.

Given the operating costs that Epic sees on its own store, “we know that these stores can operate on vastly lower fees than Google is charging”, he said.

Epic still hopes for a better outcome from the case, which was the first time in more than two decades that a top US tech company has been found by a US court to have engaged in monopolistic behaviour. The decision dealt a major rebuke to Google even while it fights two separate antitrust cases brought by the US Department of Justice.

Sweeney, a video games programmer, founded Epic in 1991. The company, which makes the popular game Fortnite, is now valued at more than $30bn. China’s Tencent owns a roughly 40 per cent stake in the company.

Epic launched a dual-pronged legal attack on both Apple and Google in August 2020, challenging the way they run their respective app stores.

Fortnite was subsequently booted from Apple’s App Store and Google’s Play Store and remains banned. But a judge hearing the Apple case largely ruled against Epic. A petition urging the US Supreme Court to hear an appeal against that decision is pending.

Google’s fate, which was decided by a jury rather than the judge, was very different. After the verdict on Monday, Sweeney, freed from court rules that prevent anyone from talking to jurors during the course of a trial, went to thank them.

“Everybody is a smartphone user now, and one of the jurors is a Fortnite player, and it was good to see,” said Sweeney. “It was just really heartening to see that the justice system worked so well in the end.”

Sweeney said he believed Google’s loss was in large part explained by the weight of evidence against the company regarding the billions of dollars it paid the likes of Samsung over the years to keep its suite of apps and its Play Store on their devices.

The judge in the case, US district judge James Donato, also criticised the company for its failure to preserve evidence, with internal policies for deleting chats. He instructed the jury that they were free to conclude Google’s chat deletion policies were designed to conceal incriminating evidence.

“The Google folks clearly knew what they were doing,” Sweeney said. “They had very lucid writings internally as they were writing emails to each other, though they destroyed most of the chats.”

“And then there was the massive document destruction,” Sweeney added. “It’s astonishing that a trillion-dollar corporation at the pinnacle of the American tech industry just engages in blatantly dishonest processes, such as putting all of their communications in a form of chat that is destroyed every 24 hours.” Google has since changed its chat deletion policy.

Epic says it is fighting for all Android developers, but it also has a clear interest of its own: boosting traffic for its own Epic Games Store, which carries a 12 per cent fee for developers selling on the platform, and seeing a smaller cut taken from its Fortnite revenues. Epic’s in-game sales of digital items and upgrades are also subject to Apple and Google’s commission fees.

While Google operates a technically “open” app ecosystem, licensing Android to smartphone makers which can in theory offer rival stores, Apple has an end-to-end “closed” model where it offers iOS exclusively on Apple devices.

For Sweeney, while the execution may differ between Apple and Google, the result is the same. “You have monopolies on distribution being imposed in absolute terms by Apple and then just by sleazy underhanded terms by Google. And these practices haven’t successfully been stopped yet.”

Google said it competes “fiercely” with Apple as well as other gaming-specific platforms. On Android, it is also possible to download apps from other sources. Apple also challenges the notion it operates a monopoly around iOS.

The next steps in the Google case are complex. The tech giant can appeal against the jury verdict sometime next year. A separate hearing will allow the judge to consider what Google needs to do to change its policies and its contracts with smartphone makers, network operators and game developers.

“I expect that will be a robust process, because Google has cut off competition in so many different ways and has entrenched their monopoly so deep into the Android ecosystem,” Sweeney said. “It’s going to take a multipronged set of remedies in order to restore competition to these markets.”