Epic and Google’s Secret $800 Million Unreal Engine Deal
▼ Summary
– A judge is questioning if a new, unannounced partnership between Epic and Google influenced their antitrust settlement, as it involves joint product development and marketing commitments.
– The partnership includes Epic helping Google market Android and Google using Epic’s Unreal Engine technology, with Epic spending $800 million over six years on Google services.
– Judge Donato expressed concern that this deal could be a “quid pro quo,” reducing Epic’s incentive to push for settlement terms that broadly benefit all Android developers.
– Epic CEO Tim Sweeney clarified the companies are building separate product lines, not a single joint product, and defended the payment as encouraging competition, not a payoff.
– The settlement and business deal are linked, with Sweeney admitting the settlement is part of Epic’s future growth plan, despite past statements against special deals.
A federal judge is scrutinizing whether a newly disclosed business partnership between Epic Games and Google influenced the settlement of their high-profile antitrust lawsuit. During a recent hearing in San Francisco, California District Judge James Donato raised pointed questions about a previously secret deal involving joint product development and marketing between the two tech giants. The arrangement, which includes Epic assisting Google with Android marketing and Google gaining broader access to Epic’s Unreal Engine technology, prompted the judge to consider if it reduced Epic’s motivation to fight for sweeping changes to the Android app ecosystem that would benefit all developers.
Judge Donato permitted the companies to keep most details confidential but revealed significant elements through his questioning. He described a “new business between Epic and Google” where Epic would help market Android and Google would help market Fortnite. Most strikingly, the judge disclosed a financial component, stating, “An $800 million spend over six years, that’s a pretty healthy partnership.” This figure refers to Epic’s commitment to purchase services from Google over that period. Epic CEO Tim Sweeney confirmed the spending, noting, “Every year we’ve decided against Google, in this year we’re deciding to use Google at market rates.”
Sweeney’s testimony linked the agreement to the “metaverse,” a concept he often associates with Fortnite, and hinted at Google using Unreal Engine technology more extensively. He clarified that the partnership does not involve building a single joint product, but rather each company separately developing its own product lines. The judge probed whether this lucrative deal could act as a “quid pro quo,” potentially weakening Epic’s stance in settlement negotiations aimed at lowering Google Play Store fees and making it easier for alternative app stores to operate on Android.
Sweeney strongly rejected any suggestion of impropriety, arguing that Epic paying Google actually fosters competition. “I don’t see anything crooked about Epic paying Google off to encourage much more robust competition than they’ve allowed in the past,” he stated, emphasizing it was a “significant transfer of value from Epic to Google.” He also asserted that the Epic Games Store would receive no special treatment from Android under the new arrangement.
The settlement and the business deal appear interconnected. Judge Donato suggested the partnership would only proceed if the legal settlement is finalized. Sweeney acknowledged that while specific terms are not yet set, he expects them to be, and he considers both the settlement and the deal “an important part of Epic’s growth plan for the future.” This stance seems to contrast with Sweeney’s past declarations against cutting “sweetheart deals” with platforms, where he has historically fought for equal opportunities for all developers. Both Epic and Google declined to comment on the specifics of the deal.
(Source: The Verge)
