The Big Story

The Epic v. Google lawsuit exposes Big Tech's worst behavior

If you thought the Epic v. Apple case had exposed some of the tech and gaming industry's dirtiest laundry, then let me present to you the companion antitrust suit against Google. This one may be even more explosive, especially if it also goes to trial as Apple's did back in May.

Up until last week, the Google suit had remained relatively obscure. That's both because the case against the search giant felt weaker than Epic's battle against the walled garden of iOS and because the documents involved had so far remained heavily redacted.

Last week, some of the key redactions were removed, after the presiding judge denied Google an order to seal an amended complaint Epic filed in July. The results were nothing short of astounding, revealing the extent to which Google has gone over the last half-decade to prevent any and all challengers from competing with the Play Store and Google's vast empire of software services.

• The newly unredacted complaint revealed that a Google executive suggested working in partnership with Tencent to gain more control over Epic through acquiring shares in the company.
• We first learned about this detail earlier this month, but didn't have the Tencent context at the time. Google told Protocol that Epic's complaint "mischaracterizes" its "business conversations," though it did not deny the claim.

Many of these efforts were not previously known to the public. Documents produced during discovery for the case have revealed an extensive initiative within Google called "Project Hug" designed to dissuade app makers from following in Epic's footsteps and releasing software outside the Play Store.

• Project Hug offered special deals to about 20 companies. Activision Blizzard, which owns the Hearthstone mobile card game and Candy Crush-maker King, was one such developer Google courted.
• Google paid hundreds of millions of dollars for the project and considered it largely a success, helping stop what the company thought of as Epic's "contagion" of rebellion in the Android ecosystem.
• Other sections of the complaint focus on the telecom business and how Google worked with phone makers like LG, Motorola and OnePlus to curb Play Store competition starting in 2019. This "Premiere Device Program" offered larger cuts of search revenue in exchange for not shipping phones with preinstalled alternative app stores. It was soon adopted by large swaths of the Android phone marketplace, the complaint said.

Google is facing down a number of antitrust investigations in the U.S., including most recently one launched by 36 state attorneys general back in July. Others include one filed last December by a coalition of 38 states and one from the Justice Department filed in October. The company has also seen extensive antitrust enforcement in the EU.

• The central theme is Google's alleged abuse of monopoly power in the search and advertising markets, and critically how Android and the Play Store are instrumental in maintaining Google's dominant position in those markets.
• Google has often presented the Android ecosystem as the open alternative to Apple's iOS, in that it allows sideloading of apps, forking into third-party operating systems and the use of alternative app stores. That's why the purpose of Epic's lawsuit against Google has been more difficult to articulate.
• But the Epic case has exposed how far Google has gone to make those features seem extremely unappealing to large mobile app makers and phone manufacturers, both through financial incentives and through the looming threat of losing access to Google Play Services or having your app banned, as Fortnite was.

Google's defense against Epic so far has been to claim that "Android provides more choices in mobile devices for developers and consumers," as it did in its statement regarding the unredacted complaint. But that claim doesn't hold up against the reality of its business strategies, which have mostly centered on depriving developers and consumers of such choices.

The main motivating factor for Google appears to be money. The company estimated in 2019 that it risked losing as much as $6 billion per year if app makers and app store operators banded together with Epic and began creating alternative distribution channels. So instead of offering a superior product, the company muscled its way to a market position now being viewed by U.S. regulators as potentially anticompetitive. Now that we know some of the mobile industry's dirtiest secrets, Epic's Fortnite lawsuit doesn't seem so silly anymore.

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Overheard

• "So game development is hard. Every time you fix one thing, you might be breaking another. This is especially true about open world games. Yet, that interplay of all the systems is what ends up making them all super interesting." ―Nate Purkeypile, a former Bethesda game designer, revealed a particularly troubling bug in the iconic opening sequence of The Elder Scrolls V: Skyrim in which the cart carrying the main character would fly into the sky. His story inspired other colleagues to share their development secrets.
• "A publisher can offer a lot to an indie project, and a good deal is the difference between gamedev being a year-long stint or a long-term career for me, but that's not worth the pound of flesh I was asked for." ―An indie developer who goes by the name Jakefriend spoke with Kotaku after his Twitter thread about a horrendous publishing deal he was offered for his Kickstarter game Scrabdackle went viral. Jakefriend stressed that these exploitative contracts are endemic in the industry and part of a longstanding practice among publishers to squeeze small creators for their profits and agency.

Lootbox

• The Clash of Clans maker has a new game. Supercell, the Finnish mobile gaming giant behind some of the top-grossing games of all time, has a new title called Everdale that soft-launched in some countries (but not yet the U.S.) yesterday, The Verge reported.
• Embracer Group's buying spree continues. The Swedish video game holding company has added three new acquisitions, for a total of 11 studio purchases just this month, Gamesindustry.biz reported last week. Embracer, which purchased Borderlands developer Gearbox Software earlier this year for $1.3 billion, is one of the most prolific buyers in gaming today.
• Oculus co-founder's new studio raises $30 million. Nate Mitchell, known best for being an early executive and co-founder at Oculus VR, has raised another round of funding led by Andreessen Horowitz for his new San Francisco-based studio Mountaintop, VentureBeat reported. The developer is working on an online shooter game that's still in the concept stage.
• Roblox struggles to moderate mass-shooting content. An Anti-Defamation League researcher has repeatedly alerted Roblox to player-made recreations of the Christchurch shooting he's found on the platform, The Verge reported, only for more to keep popping up. Roblox said its moderation tools are ill-equipped at blocking such content because text bans on "Christchurch" would bar any and all content related to New Zealand's largest city.
• Outriders developers haven't seen royalties. In a story that's become emblematic of the complex and often exploitative deals between developers and publishers, Outriders maker People Can Fly claimed last week they haven't seen a penny of royalties despite selling as many as 3 million copies. The studio suggested publisher Square Enix's release strategy, which included a Xbox Game Pass deal, may have hampered profitability.
• Sony abandoned a VR studio after five years of development. An in-depth Polygon investigation described the peculiar situation at Sony Manchester, which worked for five years on an unannounced VR game before the company shut it down. The title — CSAR: Combat, Search, and Rescue — was to be a helicopter pilot simulator built for the PlayStation VR headset.
• Tencent is still growing fast, but crackdown concerns loom. Tencent reported second-quarter earnings last week showing the same slowdown in growth other game companies have experienced after being unable to replicate last year's pandemic boom. Profits are still up 29%, CNBC reported, but Chinese regulators are scrutinizing the firm more heavily while state media this month referred to online gaming as "spiritual opium."
• California goes after Riot Games again. The state's DFEH, the same agency suing Activision Blizzard, has accused Riot of using secret agreements with female employees to prevent them from participating in ongoing sexual harassment investigations, Bloomberg reported. Meanwhile, some Activision Blizzard recruiters have started telling employees to stop speaking out, as it's hindering efforts to find new candidates.

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Look out for

Industry news site Gamasutra is getting a rebrand

After nearly a quarter of a century, one of the most well-respected industry trade publications in gaming is losing its controversial name. Gamasutra, which helped pioneer a more developer-centric style of video game reporting, is rebranding to the cleaner GameDeveloper.com starting Thursday.

The name pays homage to the defunct magazine of the same name from which Gamasutra was spun out. "Maybe this all doesn't sound so bad here, but trust me, after years of cringe and awkwardness you realize just how overdue we are for a name change," wrote Gamastura publisher Kris Graft in the announcement post. "And judging by Twitter responses from game devs, you're all ready for the change too."