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Google allegedly paid a hefty sum to Activision to block rival app store

Google Play Store Icon Logo AH 2020
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As per Reuters, to prevent major game developers from competing with Google Play Store by launching their own platforms, Google struck deals with 24 major app developers. According to a court filing, Google allegedly paid Activision Blizzard Inc. about $360 million over three years and $30 million over one year to Riot Games, a unit of China’s Tencent Holdings Ltd. To keep the gaming company away from competing with Google.

Google paid $360 million to Activision Blizzard

The financial details of this deal emerged in an unredacted copy of a lawsuit that “Fortnite” video game maker Epic Games first filed against Google in 2020.

Google made the $360 million deal after Activision told Google it will launch its own app store. This meant that Google would lose one of its biggest clients. According to Epic, Google knew that paying off Activision “effectively ensured that (Activision) would abandon its plans to launch a competing app store.” Epic also alleged anticompetitive practices related to the search giant’s Android and Play Store businesses.

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Google kicked Fortnite out of the play store after the app started including a link to its own in-app payment platform, thus violating Google’s policies. This was an attempt to bypass Google’s payment platform, which takes a 30% cut on every in-app purchase.

Google has denied all allegations, calling the lawsuit baseless and full of mischaracterizations. According to Google, these payments were part of a plan known as Google’s “Project Hug.” Further, Google said that some of these payments were part of YouTube postings and credits toward ads on Google’s advertising platform and cloud services.

Activision also denied any allegations, saying, “Google never asked us, pressured us, or made us agree not to compete with Google Play and Epic’s allegations are nonsense.”

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Difference between the Play Store and the Apple App Store

According to the allegations, Google was concerned that it could lose billions of dollars in app sales if game developers abandoned the Play Store to either make their app store or go on competing app stores like the Galaxy app store as Android allows users to side-load apps. Therefore, Google signed deals with major app stores like Nintendo, Ubisoft and the meditation app Calm to stay on Google’s platform.

The major difference between Google and Apple is that Google’s Android allows users to side-load apps. Therefore, game developers could switch to a new app store if they wished to do so. Apple does not allow its users to side-load apps, which gives Apple complete control over the apps installed on an iPhone.