More from Epic v. Google: everything we learned in Fortnite court
As part of an executive summary titled “We are fine-tuning Android Search Rev share (ex Samsung) to protect Google from key strategic risks),” Google CFO Ruth Porat and others were presented with this ask:
Ask: Spend $2.9B in total in 2020 (+141M to status quo) growing to $4.5B (+$600M) in 2023 across Search and Play for carriers and non-Samsung OEMs to secure platform protections for Search, and Play and critical apps protections on more devices
Google planned to specifically offer revenue to phone manufacturers to “secure Play exclusivity,” among other things:
*Offer up to 16% Play rev share to OEMs (16% to key CN OEMs, 4-8% to smaller OEMs) spending est. $35M 2020 and up to $224M in 2023 (steady state) in addition to the bonus tier of current RSA to secure Play exclusivity, Android upgrades, and distribution for critical apps (Comms suite, Pay, Photos, Gmail, Gcal, Discover suite)
And as we’re seeing now, Google went through with these deals, calling them RSA 3.0.
Tanuj Raja, Google’s global director of strategic partnerships, said it was “just his two cents” that a new Google strategy to contractually obligate Google apps might ensure “less consumer experience fragmentation” and help “stem the tide of emerging app stores,” he concluded in a July 2nd, 2014, email.
Jim Kolotouros, who’s currently on the stand, suggested it wasn’t just Raja’s two cents in a follow-up email — that it was a good idea and that Raja’s “last paragraph is the key.”
James Kolotouros, VP of Android platform partnerships, says yes. But not every phone comes with an alternative app store, he concedes.
(He’s slightly wrong, as far as we’re aware: Huawei still sells some phones outside China.)
We’re live from day 5 of Fortnite court in the Epic v. Google trial:
We’re back with a new witness: James Kolotouros, VP of Android platform partnerships. Google attorney Lauren Moskowitz is using him right away to establish one key thing: Google contractually requires every Android device manufacturer to preinstall the Google Play app store on every phone that uses its core APIs — and place it on the default homescreen and keep users from deleting it.
That contract is called a MADA: Mobile Application Distribution Agreement.
“Google requires Google Play to be on the default homescreen, as opposed to any other homescreen, because users are more likely to see it and use it than when it’s on any other homescreen, yes?”
Yes, Kolotouros agrees.
Google offered Netflix 10 percent instead of 15 percent in September 2017 — and Netflix rejected it. I have to catch a train, but I’ll explain more later.
We’ll be back Monday.
Google’s Margaret Lam is becoming quite the smoking gun in the hands of Epic attorney Lauren Moskowitz, at least when it comes to building the impression that Google tried to avoid leaving a document trail.
Moskowitz is presenting a seemingly unending string of instances in which Lam asks her colleagues to turn off chat history — including one where a colleague repeatedly insisted he was on a legal hold, and thus the documents needed to be preserved. “Ok maybe I take you off this convo :)” she wrote.
To her credit, it looks like she went looking for better guidance after that conversation. She claims she was given bad advice — “it was an open question” after her first call with lawyers as to what needed preserved — and now understands she did not comply with her legal obligations.
That seems plausible. But initially, she said a lawyer never explained her obligations after the legal hold.
Not all of Margaret Lam’s chats were deleted — this phrase comes from a 2021 chat, four months after Epic filed its lawsuit against Google. Epic’s trying to show that Google’s lawyers trained its employees to avoid creating evidence.
Lam says she didn’t get that sort of training.
Here’s another chat message from Lam to a colleague:
“Would it be too much to ask you to turn history off? lots of sensitivity with legal these days :)”
Lam says that her colleague did turn history off, and they had a discussion about Google’s contracts with Android device makers that was, in fact, deleted.
Lam testified earlier that no attorney explained her obligations to preserve documents after Epic’s legal hold.
“Like feel like everyone just in 9 hours of meetings a day straight!” began a joking chat thread from Google senior product counsel Emily Garber with a colleague.
It also included passages like these:
Oh also Ads team in freaking out about some Play VP escalation over that new policy so let me know if you want to discuss!
Play originally wanted to prohibit Ads leading to non-Play downloads (!!) but then settled for reasonable intermediate policy basically saying if you’re running ads that take you to download from 3P store, have to disclose!
We’ve moved on to Margaret Lam, a head of strategy for the Android platform and ecosystem. She’s being grilled about her deleted chats.
Now we’re back from lunch, Epic wants to introduce a document that Google wants redacted — apparently, the part it wants redacted is a part about how the “agitation” was “likelier” because of the “EU regulatory environment” — I think? The “likely not” sentence is word-for-word though, I checked.
We didn’t get to see the document ourselves for more than a moment; we’re mostly hearing it described by lawyers.
He was here all day Monday, and all day Wednesday, and he’s been here today (Thursday) since the beginning.
He’s spent years and countless dollars waiting for his day(s) in court, so I get it. It took 1,180 days for the Google case to make it to trial.
We’re on lunch break for a bit.
Epic has again struck gold by pointing out what wasn’t there.
The proposal for Project Banyan (the scrapped deal with Samsung) begins:
Existential question:
How do we continue to keep Play as the preeminent distribution platform for Android?
What does that mean? “It means the most important question for Play,” Kochikar says.
She tried to add that “it’s just one of the questions.”
Epic lawyer Hueston replied: “Well, actually it’s the only question here on the slide, which you just described as the most important question.”
Then he dropped the mic — pointing out that Google Play’s “existential question” had nothing to do with competing with Apple and everything to do with maintaining Android.
“I have two roles. One is to figure out which apps are missing on Play and try to bring them in, and two, how to fix the apps on Play and make them better,” says Kochikar.
Google has suggested at least once during this trial that the Google witnesses were employed to act strategically and decisively to win business (and thus may have been seen saying inflammatory things as a result).
We’re now looking at a Google employee’s suggestion that Play could “partner with Apple to change the industry tide around subscriptions,” and Kochikar defended it this way:
“This is a very junior person adding ideas in a brainstorming session... was a very junior person on my team”.
I think you can guess Kochikar’s answer.
But she also pointed out that Spotify “was one of the biggest ad customers as well,” and said Spotify was an important partner because it’s “excellent at investing with us in nacent platforms before they become critical,” like Android Auto.
Spotify was an agitator, though — and got a special, secret deal from Google.
“Could Google charge developers an upfront cost for each download of an app?” asks Google’s attorney.
“We could; it’d be a very bad thing,” replies Kochikar. “Because most users across most apps use it for free — if the developer had to pay for it, it would be expensive and stop innovation from happening from small developers.”
Earlier, she said that Google developed its business model having seen how free-to-play mobile gaming took off: “A very small number of people pay, and yet everyone else gets it for free.”
“Of course not,” answers Kochikar.
Google lawyer Chiu is now coming around to addressing the $147M Google offered Epic to launch Fortnite on the Play Store. Instead of tackling the $147M head-on, though, we’re redefining “contagion.”
“It means someone would make a decision that Play is not attractive,” says Kochikar. “It means we don’t meet our goal in keeping devices in the hands of people.”
Chiu points out that Epic skipped one slide: under the “strategic value” of the deal, there’s no mention of contagion. The first “strategic value” to Google is improving the perception of YouTube Live among gamers.
Kochikar is praising Fortnite on the stand, as Google’s lawyer Michelle Park Chiu asks Google’s VP of Play partnerships some questions about what happened when Epic first considered launching the game on Play instead of sideloading.
Kochikar said the game was making a million dollars a day on iOS at the time. She clarified that she doesn’t have exact numbers.
Activision, Aniplex, Bandai Namco, Bethesda, Blizzard, Com2uS, EA, King, Mixl, Niantic, NCSoft, Netmarble, NetEase, Nexon, Nintendo, Pearl Abyss, The Pokémon Company, Riot, Square Enix, Supercell, Tencent, Ubisoft.
The goal was to pitch all 22 by August 2019.
As of a later document, Google says 20 out of 21 devs signed. I’m not clear whether those were the same 21 or different ones — we also heard that Supercell rejected a deal.
Kochikar is basically explaining that “co-marketing” and “ad credits” aren’t the same thing as handing out a bundle of cash. For example, Google’s ad credits meant “we would spend one dollar for every three dollars they spend,” she says.
And in a 2019 presentation, Google explicitly says it’s not a goal to block other stores:
Non-goals: stop launch on other Android stores (e.g. Galaxy Store)
“It is important to note that this is not an exclusivity program,” reads a line in a Google email discussing the presentation.
Kochikar was not convinced that Activision would actually follow through on a threat to launch its own app store, as of a December 2019 email.
We also just saw charts, prepared by Activision Blizzard King in 2022, it appears, that show the company’s app installs and monthly active users went up and stayed up by a lot after the Google deal.
I’m not sure how the latter helps Google’s case. If ABK got special treatment from Google, wouldn’t it see an uptick? But I also think the rise might have something to do with Call of Duty: Mobile, the biggest mobile game launch ever.
“Was Riot ever prohibited from opening its own store?” Or from distributing elsewhere? On other app stores? On Apple’s App Store?
No, no, no, and no, Kochikar tells Google’s lawyer.
She says that “pulled out the stops” meant taking experts down to LA for three days to convince Riot how much Google cared — “it was their choice after that,” she says. Google didn’t try to explain the $10 million.
Kochikar had similar answers about the Activision Blizzard King deal, which she confirms was done. ABK was pleased — and wanted a renewal.
In a document encouraging Google to fully greenlight the deal with Riot Games, Kochikar wrote:
We pulled all stops (promised them $10M marketing before they signed GVP for example) to get Riot to stop their inhouse “app store” efforts and bring their billion dollar League of Legends franchise and other mobile games to Play (they were most likely to follow Epic’s example). Since then they have pre-registered their games on Play first!
That’s the closest thing we’ve seen yet to Epic’s assertion that Google bribed companies.
“If we don’t do a deal, [Activision Blizzard King] will continue to try different ways to get revenues off of Play. Building a stronger relationship (and we need to believe this deal will lead to that) will preclude investments in alternative ways of monetizing off Play.”
That’s what Kochikar wrote to other key Google partnership leads in December 2019.
And in an old deposition, Kochikar agreed the Project Hug requirement to simultaneously ship games on Google Play was intended to disincentive alternative app stores — apparently not just because Google wanted the games, too.