Google offered Epic $147M to launch Fortnite on Google Play

Google has confirmed in court (reported by The Verge) that it offered Epic a $147 million deal to release its popular game Fortnite on Google Play. Google’s VP of Play partnerships, Purnima Kochikar, stated that the deal, although approved and presented to Epic, was not accepted. 

This proposed deal would have disbursed the money over a three-year period through “incremental funding” until 2021. Its primary purpose was to prevent a potential scenario where popular apps bypassed Android’s official store, along with Google’s in-app purchase fees, which are a significant source of revenue for the platform.

Initially, Epic launched Fortnite on Android in 2018 through its website, avoiding Google Play, which allowed them to sell Fortnite’s in-game currency, V-Bucks, without paying the Play Store’s required commission. However, in 2020, Epic decided to relent on this approach, citing issues like “scary, repetitive security pop-ups” and other disadvantages.

Epic subsequently filed an antitrust lawsuit in which it alleged that its initial decision had caused Google considerable concern. They referred to internal documents suggesting Google’s apprehension of a “contagion risk,” where other game developers (including Blizzard, Sony, and Nintendo) might follow Epic’s lead. To prevent this, Google offered special incentives and even considered acquiring Epic.

These “contagion” concerns were discussed in court when Lawrence Koh, the former head of Google Play’s games business development, testified. Google was worried about losing top game developers from Google Play within a few years of Epic’s decision, potentially resulting in a significant loss of revenue, estimated at billions of dollars. 

Internal documents presented in court projected that Fortnite’s absence could lead to direct revenue losses ranging from $130 million to $250 million, with a downstream loss of up to $3.6 billion in the event of a massive defection.

Google’s stance is that its concern was primarily about retaining games on Google Play. They wanted developers to choose the Google Play Store, as stated by Purnima Kochikar in her testimony. Google viewed investments in getting games on its platform as a worthwhile endeavor, especially given the possibility that developers might choose to launch on Apple’s iOS platform first.

In contrast, Epic is using these documents to argue that Google feared competition in Android app distribution and has maintained an unlawful monopoly with its Play Store. Epic Games alleged that Google employed a “bribe or block” tactic to deter competition, referring to Project Hug, where Google purportedly paid companies like Activision Blizzard and Riot Games to dissuade them from creating their own Android app stores.