Google spent hundreds of millions to avoid another Fortnite scenario.
Google paid hundreds of millions to game developers in incentives to maintain their games on Play Store. This is a new complaint that Epic Games has filed against Google in its antitrust lawsuit. This program was formerly known as Project Hug, or later the “Apps & Games Velocity” Program.
Epic Games released Fortnite for Android’s first version in 2018 outside the Google Play Store. Epic Games instead required players to download the installer from their website. This allowed Epic to avoid Google’s $30 per-install fee, but at the expense of making the installation more difficult. Epic Games eventually gave in and released Fortnite on Google Play Store in April 2020. This was before Google removed it. Epic Games added a feature that allowed players to bypass Google’s fees when they make in-app purchases. This started the current series of lawsuits.
Epic claims that Google was so worried about developers following Fortnites lead and cutting out the lucrative business that it created a program called “Project Hug” to ensure that developers stayed with the Play Store.
GOOGLE REPORTED BEING TERRIFIED THAT OTHER DEVELOPERS WOULD FOLLOW EPIC’S LEAD
The complaint states that a 2019 report by Google Play’s finance team raised concerns about Epic’s ability to negotiate a deal with OEMs such as Samsung to preinstall its rival store. This would win over developers with lower revenue splits (a strategy Epic uses with its PC-based store) and help open the door for Android users who want to shop at other storefronts. The team estimates that Epic Games Store Android could cost Google $350 million to $1.4 billion by 2022. If other apps stores, such as Amazon or Samsung, gain full traction, these losses could rise from $1.1 billion up to $6 billion.
Project Hug was created as part of an effort to limit Epic’s influence. It was “a hug developers close plan and show love plan” or “a surge plan for throwing extra love/promotion top developers and games (including Tencent portfolio company companies),” Android executives explained internally. This translated into spending “hundreds and millions of dollars on secrets deal with over twenty top developers” that the company deemed most at-risk of Epic’s “contagion.”
Google documents indicate that Project Hug was essentially a success, even though many developers targeted had inquired about revenue sharing or considered their distribution channels. To keep Project Hug’s targets in the Play Store, Google had already signed agreements with many of them by 2020.
In a statement, Google spokesperson Peter Schottenfels stated that Google Play is competing with other app stores for Android devices and on rival operating system platforms. We’ve long had programs in place that support best-in-class developers with enhanced resources and investments to help them reach more customers across Google Play. These programs help developers greatly and are a sign that there is healthy competition between app stores and operating systems.