Google discussed teaming up with Tencent to take over Epic Games

Unredacted court documents reveal more details about Google's strategies for protecting the Google Play store.

Fortnite on a phone

Fortnite drew Google's interest in Epic.

Photo: Joshua Hoehne/Unsplash

Google executives discussed approaching Chinese gaming giant Tencent about purchasing shares in Epic Games or potentially orchestrating a hostile takeover of the company, according to court documents in the ongoing Epic v. Google antitrust case that are no longer redacted as per a court order issued on Wednesday.

"Google recognized that Epic might not accept its offer. 'As a potential alternative', a senior Google executive proposed that Google 'consider approaching Tencent,' a company that owns a minority stake in Epic, 'to either (a) buy Epic shares from Tencent to get more control over Epic', or '(b) join up with Tencent to buy 100% of Epic,'" the complaint said.

This information was produced during discovery, and Epic initially included it in an amended complaint back in July; however portions of it were subject to seal by the court. Tencent, one of the largest game developers and publishers in the world with stakes in countless companies, acquired a 40% stake in Epic back in 2012. Epic CEO Tim Sweeney maintains control of the company.

Other unredacted sections of Epic's complaint reveal more new details, including those from a meeting between Apple and Google that took place in 2018 to discuss increasing search revenue growth; Google pays Apple large sums of money to make Google Search the default search engine on the mobile Safari for the iPhone. Following the meeting, an Apple representative suggested to a Google senior member that the two companies team up and "work as if we are one company" to combat efforts like Epic's to undermine mobile app store commission rates and restrictions against alternative app stores.

Other now-unsealed portions of the complaint deal with new information surrounding Google's so-called "Project Hug," an initiative designed to sway top Android app makers and game developers not to leave the Play Store using kickbacks, commission reductions and other financial incentives. Google calculated that it risked losing up to $6 billion in revenue if more developers followed Epic in leaving the Play Store. So Google spent hundreds of millions of dollars on around 20 deals with top companies, including Activision Blizzard, to keep them from following in Fortnite's footsteps, the complaint detailed.

Up until now, Google's intention to try and purchase Epic Games and other details about its efforts to combat competition first became known only in a broad sense, because the court documents containing that information that were first made public earlier this month were still partially redacted. But Judge James Donato, who is presiding over Epic's antitrust lawsuit against Google, denied Google's attempts to keep the documents sealed in an order issued yesterday.

"On occasion, there may be a good reason to limit the public access that law and long tradition demand. Court filings that expose a person's sensitive medical information, for example, or a business's trade secrets, are candidates for sealing," Judge Donato wrote. "No similarly sensitive information is at stake here. Complaints are the beating heart of every lawsuit, and Google had the burden of presenting a compelling reason for sealing the documents that are integral to the merits of Plaintiffs' claims."

In a statement, a Google spokesperson said, "As we have stated previously, Epic's lawsuit is baseless and mischaracterizes our business conversations. Android provides more choices in mobile devices for developers and consumers."

Update Aug. 19, 3:15PM ET: Added more context around Apple and Google's 2018 meeting and Google's Project Hug.

Update Aug. 19, 3:44PM ET: Included statement from Google.

Protocol | Policy

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Photo: Caspar Camille Rubin/Unsplash

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