Google considered buying Epic Games during fight over Fortnite, court filings say

Google contemplated “buying some or all” of Epic Games during its ongoing battle with the Cary-based video game maker over the future of its popular Fortnite app on Android phones, newly released court documents say.

The claim, made by Epic Games in its antitrust complaint against Google, had originally been redacted. But in an amended complaint released late on Thursday, those specific redactions had been removed.

Large segments of the complaint remain redacted, however.

In July, Epic Games filed an amended complaint against Google that redacted many sections and documents that Google requested the court seal. But, after a case-management meeting with a judge, Google agreed to remove more redactions from the complaint.

Epic is engaged in twin antitrust cases against Apple and Google, the makers of the two most popular operating systems for smart phones.

Epic is hoping to prove in court that Google and Apple unlawfully restrict how app makers can distribute their products to iPhone and Android owners and force too high of fees on purchases made within apps.

In its complaint, Epic said that Google has “eliminated competition in the distribution of Android apps” and “installed itself as an unavoidable middleman for app developers who wish to reach Android users.”

Epic said Google used its size and money to force third-party app developers into agreements that maintained Google’s monopoly via the Google Play Store. While “sideloading” apps onto Android phones outside of the Play Store is possible, Epic argues that Google has put up many technical barriers against that approach to make it unattractive.

“Google uses its size, influence, power, and money to induce third parties into anticompetitive agreements that further entrench its monopolies,” Epic’s complaint states. “For example, Google has gone so far as to share its monopoly profits with business partners to secure their agreement to fence out competition, has developed a series of internal projects to address the ‘contagion’ it perceived from efforts by Epic and others to offer consumers and developers competitive alternatives, and has even contemplated buying some or all of Epic to squelch this threat.”

The complaint doesn’t share messages or document discussing a potential deal to buy Epic or that it reached out to Epic about the possibility.

It is still unclear when this discussion would have taken place. Epic Games launched Fortnite on Androids in 2018, and squabbles between the two companies began early on.

A spokesperson for Epic Games declined to comment.

In a tweet on Friday, however, Epic CEO Tim Sweeney said Google’s interest in acquiring Epic was “unbeknownst to us at the time, and because of the court’s protective order we’re just finding out now about Google’s consideration of buying Epic to shut down our efforts to compete with Google Play.”

“Whether this would have been a negotiation to buy Epic or some sort of hostile takeover attempt is unclear,” Sweeney added.

Google responded to a request for comment a day after this story was published online, issuing a short statement: “Epic’s lawsuit is baseless and mischaracterizes our business conversations. Android offers developers more choice than other systems and we’re confident the court will agree.”

The Verge first reported on the amended complaint.

In 2019, Epic protested Google’s 30% fee on in-app purchases by refusing to put Fortnite on the Play Store and asking users to sideload the game from its website. The sideloading feature on Android is not something that is possible on an iPhone.

But in 2020, just a few months before it sued both Apple and Google, Epic relented, saying Google put sideloaded apps at too much of a disadvantage.

In the amended complaint, Epic said that Google also tried to offer Epic several “special deals” to convince it to put Fortnite on the Play Store and abide by the 30% fee.

“Google offered to placate Epic by offering it preferential terms on side deals, such as YouTube sponsorships and cloud services, if Epic agreed to distribute Fortnite in the Google Play Store and acceded toGoogle’s 30% tax,” the complaint states, noting other developers have agreed to deals like that. Most of those developers are redacted, but Activision Blizzard, the maker of games like Call of Duty and Overwatch, is included.

Epic also states in the complaint that Google executives admit sideloading is an unattractive alternative to the Play Store. It says it has documents showing an executive acknowledging sideloading is “an awful experience” and that developers should “worry that most will not go through the 15+ steps” needed to sideload an app.

Epic is no longer alone in suing Google’s Play Store.

Last month, 37 state attorneys general, including Josh Stein of North Carolina, sued Google for operating a monopoly via the Play Store, The News & Observer reported.

Stein told The N&O that Google makes it overly difficult for users to get apps outside of the Play Store and charges too high of fees because of its monopoly.

“When people buy things from payment processors the typical rate is 3%, and Google is charging 30%,” said Stein, a Democrat. “And so I’m bringing this lawsuit along with 36 other attorneys general, Republicans and Democrats alike, to stop Google from using its dominant market position in Android to harm consumers.”

Google disagreed with the opinion of the state attorneys general. In a blog post last month, the company said the complaint by the states “mimics a similarly meritless lawsuit filed by the large app developer Epic Games, which has benefited from Android’s openness by distributing its Fortnite app outside of Google Play.”

Epic sued both Google and Apple last August after Epic introduced its own payment system within its Fortnite app to get around each company’s 30% fee on in-app purchases. The move violated both Google and Apple’s rules, and Fortnite was kicked out of the App Store and Play Store.

Epic’s lawsuit against Apple has moved much faster than the one against Google. Earlier this summer, Epic and Apple squared off in the court room for several weeks.

A judge is expected to rule in that case in the coming days or weeks, and could influence the future direction of app stores.

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate.

This story was originally published August 6, 2021 at 2:36 PM.