Google ‘Contemplated Buying Some or All of Epic,’ Suit Says

(Bloomberg) — Google, which is being sued by Epic Games Inc. over the fees it charges developers in its mobile-app store, was at one point considering acquiring the game maker, according to previously redacted documents in the court fight.

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Google “has developed a series of internal projects to address the ‘contagion’ it perceived from efforts by Epic and others to offer consumers and developers competitive alternatives, and has even contemplated buying some or all of Epic to squelch this threat,” according to an excerpt from Epic’s complaint that was previously sealed from public view and was included in a Google filing last night in San Francisco federal court.

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Epic is also fighting iPhone maker Apple Inc. over fees of up to 30% that it charges large developers using its App Store. The trial in the Epic-Apple case took place in May, and the companies are awaiting a ruling from the judge. In its filing Thursday night, Google revealed previously redacted materials in their separate legal battle.

The documents shed new light on how Google views the commission it collects from app purchases and subscriptions in the Google Play Store. A coalition of state attorneys general said in a separate antitrust lawsuit filed in July against Google that the fee is “extravagant” and harms consumers.

Read more: Epic-Apple judge’s ruling won’t please either side

“Epic’s lawsuit is baseless and mischaracterizes our business conversations,” said a spokesperon for Google, part of Alphabet Inc. “Android provides more choices in mobile devices for developers and consumers.”

According to the latest documents, which cite internal Google communications, the 30% commission has “[n]o rationale,” and is an “arbitrary fee.”

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“We want to feel good about the rev share that we charge — have it make sense to us,” the Google documents are quoted as saying. “And it feels like there’s discomfort with what we are charging.” Google’s internal meeting minutes stated: “[W]e would probably have a stronger backbone if we felt secure about the value exchange.”

There’s no indication in the complaint that Google actually tried to buy all or part of Epic.

Epic Chief Executive Officer and founder Tim Sweeney tweeted about the filing Friday.

“This was unbeknownst to us at the time,” he said on Twitter, “and because of the court’s protective order we’re just finding out now about Google’s consideration of buying Epic to shut down our efforts to compete with Google Play.”

Thanks in large part to the success of its Fortnite game, Epic has a hefty valuation. In its last fundraising round announced in April, the game maker said it was valued at $28.7 billion. The $1 billion round included an additional $200 million strategic investment from Sony Group Corp.

Sweeney founded the company in the early 1990s. It has developed and published several hit games, as well as Unreal Engine, a set of tools used by many developers. Nearly a decade ago, Sweeney sold a 40% stake in Epic to China’s Tencent Holdings Ltd.

Fortnite debuted in 2017, and the battle-royale-style game quickly became a best seller, and it generated billions for Cary, North Carolina-based Epic over the years.

(Adds Google’s comment in fifth paragraph.)

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