Epic and Google have a secret $800 million Unreal Engine and services deal

A judge is questioning whether Epic Games and Google are settling their long-running antitrust battle in part over a previously unannounced partnership involving the Unreal Engine. fortniteand Android. At a hearing in San Francisco today, the court revealed that Epic and Google have struck a new deal that appears to include “joint development of products, a commitment to joint marketing, and joint partnerships.” California District Judge James Donato expressed concerns that the agreement — which he noted would involve Epic “helping Google market Android” and Google more recently “using Epic’s underlying technology” — could have prompted Epic to water down its demands for changes to the overall Android ecosystem.

Donato allowed Epic and Google to keep most details of the plan under wraps. But during the hearing, he questioned witnesses, including Epic CEO Tim Sweeney and economist Doug Bernheim, about how this might impact settlement talks — and revealed some hints in the process. “Google will help market Android, and they will help you market fortnite; That deal doesn’t exist today, right? Donato Bernheim asked and he answered in the affirmative. He also described it as “new work between Epic and Google.”

Sweeney’s testimony has somewhat unraveled the mystery. He pointed to the agreement regarding the “metaverse,” a term Sweeney used to refer to an Epic game. fortnite. “Epic technology is used by many companies in Google’s industry to train their products, so Google’s ability to use Unreal Engine is more complete… Sorry, I’m spoiling confidentiality,” Sweeney said.

Donato then offered a hard dollar figure on one part of the deal: “Spending $800 million over six years, that’s a very healthy partnership.” We quickly learn that this refers to Epic spending $800 million to buy some sort of service from Google: “Every year we decide against Google, and this year we decide to go with Google at market prices.” Sweeney has thrown cold water on the idea of ​​Epic and Google working together to build one new product together. “This is Google and Epic building product lines separately,” he explained, when Judge Donato asked what term sheet the term sheet referred to with the line “Google and Epic will work together.”

Google declined to comment on the deal. Epic did not immediately respond to a request for comment.

Donato appeared wary of the partnership, asking Bernheim if it could constitute a “quid pro quo” that reduces Epic’s incentive to push for terms that would benefit other developers. Currently, Epic supports a settlement that would see Google lower its standard App Store fees worldwide and allow alternative app stores to sign up for easy installation on Android.

Sweeney took issue with the idea that Epic might get paid to relax its terms, when it is the one paying. “I don’t see anything crooked about Epic paying Google to encourage much stronger competition than it has allowed in the past,” he said. “We view this as an important transfer of value from Epic to Google.” He also says that the Epic Games Store will not get any special treatment from Android in the future under this deal.

The settlement arrangements appear to be linked to the commercial deal. Judge Donato suggested that Epic and Google would not make the deal unless they settled. Sweeney says the specific terms of the deal have not yet been reached, but he admitted he expects it will. The judge told Donato that he considered the settlement and deal “an important part of Epic’s growth plan for the future.”

Sweeney has said in the past that Epic wouldn’t make good deals with platforms. In 2023, after Epic against Google Victory said Edge “We’ve always rejected Epic-only offers. We’ve always fought on the principle that all developers should be given, you know, the same opportunities.”

Disclosure: Vox Media, parent company of The Verge, has filed a lawsuit against Google, seeking damages for its illegal monopoly on ad technology.