Google fought hard to keep this number a secret--and lost.
The world now knows that in January 2020, Google signed a three-year agreement with Activision Blizzard King ("ABK"), "pursuant to which Google agreed to pay ABK approximately $360 million" in order to dissuade Activision Blizzard from creating its own Android app store. Three-hundred and sixty million dollars for not competing.
First, a screenshot in which I underlined that revelation (click on the image to enlarge):
Second, the complete document:
Exhibit A to Epic Games' motion to amend its antitrust complaint against Google
That number would be staggering under any circumstances, but it couldn't have been revealed at a more important point in time: as antitrust authorities in the U.S. (Federal Trade Commission (FTC)), EU (Directorate General for Competition (DG COMP) of the European Commission), and the UK (Competition & Markets Authority (CMA)) have to make their next decisions on Microsoft's acquisition of Activision Blizzard King. While Sony is the only vocal complainant, Google is also known to have been lobbying behind the scenes.
In a recent filing with the CMA, Microsoft announced its plans to "shift consumers away from the Google Play Store and [Apple] App Store" leveraging Activision Blizzard King's mobile games. Just this week, Microsoft Gaming CEO Phil Spencer gave an interview to The Verge in which he said in no uncertain terms that Sony's concerns over the continued availability of Activision's Call of Duty (CoD) on the PlayStation can be addressed and--as GameSpot summed it up--that the deal is more about Candy Crush (the most popular mobile game ever) than CoD. On other occasions, Mr. Spencer has also talked about the traction that the mobile versions of some of ABK's other games have.
The fact that Google considered ABK so key to the maintenance of its Android app distribution monopoly as to pay $360 million dollars serves to validate Mr. Spencer's stated strategic priority regardless of the fact that the recent launch of CoD Modern Warfare II has been wildly successful. Everyone can see now that ABK's mobile games are indeed key to opening up mobile app distribution. In this case, money--Google's money--speaks a very clear language.
When the European Commission opened its in-depth investigation of the merger last week, I wrote that "Microsoft's acquisition of Activision Blizzard King will further the goals of the EU's Digital Market Act (DMA)." Again, that was on the money. On Google's money.
In the same post in which I quoted Microsoft's plans for competing with Apple's and Google's mobile app stores (I was first to do so), I also mentioned Epic's fight for transparency. Google insisted that not only the $360 million figure but also various other facts concerning that deal with Activision Blizzard King remain sealed. Epic would actually have accepted to keep the dollar amount secret, but at least wanted "ABK’s plans to create an alternative game distribution platform, and its changes to those plans as a result of its agreement with Google" to become known, as they "are critical to the public’s understanding of how and why Google’s payments not to compete were unlawful, and how Google has been able to monopolize the markets at issue in these cases."
Now, surprisingly, even the dollar amount has been revealed. Judge James Donato of the United States District Court for the Northern District of California had entered the following order on Tuesday (November 15):
"The request by plaintiffs Epic and Match to file amended complaints, [...], is granted. The amended complaints must be filed by November 29, 2022. The parties are directed to file a joint proposed amended scheduling order by December 13, 2022. The requests to seal the motion to amend briefs are denied for lack of good cause. [...] Unredacted versions should be filed by November 22, 2022."
It often happens in U.S. federal court, and above all in that particular district, that judges insist on transparency. Here, Judge Donato went beyond what Epic was asking for, and it is great that he did.
Here's a quick recap of the procedural context:
On October 7, Epic and Match Group (Tinder) filed a motion to amend their complaints. For Epic, that's already the second amended complaint; Match joined the case later (only this year), and for them it's the first amended complaint. The key change is that they allege a per se violation of the Sherman Act through Google's "Project Hug" (of which the deal with Activision Blizzard King is the most interesting part now, but there were about two dozen deals like that). A per se violation would be deemed unlawful without the court having to analyze any procompetitive justifications (no "rule of reason").
Two weeks later, Google opposed the motion to amend those complaints. I disagreed with Google's arguments. They claimed a vertical relationship where all that mattered was a horizontal one; and the "prejudice" they alleged they would suffer from the amendments looked to me like something that couldbe offset by the right to conduct some additional discovery (if necessary at all).
On November 15, Judge Donato granted the motion, and asked the parties to propose an amended case schedule (by December 13). We may see alternative proposals then.
Furthermore, Judge Donato denied the related sealing motions "for lack of good cause." This was a win for Epic, even going beyond what they asked for. Epic wants transparency; Google insisted on secrecy, but to no avail.
Earlier today I reported on another interesting decision: all plaintiffs (three dozen U.S. states, Epic, Match, and consumer class-action plaintiffs) want Google sanctioned over the systematic and automatic deletion of company-internal chats, and Judge Donato will hold an evidentiary hearing in mid January before adjudicating the motion.
It's been quite a week in the mobile app store antitrust arena, which started with the Epic Games v. Apple appellate hearing on Monday (initial commentary and further analysis).
