Three dozen U.S. states are about to settle Android app store antitrust case with Google, leaving Epic Games and Match Group as two remaining plaintiffs: San Francisco trial starts in November

At 6 PM Pacific Time on Tuesday, Google, approximately three dozen state attorneys-general, and consumer class-action lawyers filed a "stipulation and [proposed] order re deadlines in consumers' and states' actions in light of tentative settlement" in connection with the Google Play (Android app store) antitrust litigation in the Northern District of California that resulted from the procedural consolidation of multiple parallel actions. The settlement was reached the same day and is subject to certain approvals (by the state attorneys-general, which should be a formality unless there was more political resistance than I can imagine, and Google parent Alphabet's board of directors, which should be even more of a formality), after which it needs to be blessed by the court, which is also unlikely to pose a major hurdle. The plan is for a long-form settlement agreement to be submitted to Judge James Donato in about a month.

The terms have not been announced yet, not even in broad lines.

The United States District Court for the Northern District of California will hold a trial starting November 6. With the states and the consumer plaintiffs out (and developer class actions--which achieved nothing of major value to the developer community at large--having settled long before), this means that there will be only two plaintiffs: Epic Games, which brought the complaint in August 2020 after Google ejected Fortnite from the Google Play Store, and Match Group (Tinder).

First, the notice of a tentative settlement (this post continues below the document):

In Re Google Play Store Antitrust Litigation: Stipulation and [Proposed] Order re Deadlines in Consumers' and States' Actions in Light of Tentative Settlement

It is not surprising that the class-action lawyers would settle with Google: in the end they just want to get paid. The far bigger win for Google here is that the three dozen U.S. states are also prepared to drop the case. Governmental support would have been very useful for Epic and Match at the trial. A settlement with only the class-action lawyers would have been of little value to Google if the state AGs had continued to sue on behalf of their citizens. The consumer class might not even have been certified in the end.

Given the fundamental problems surrounding app distribution on Android, it is hard to imagine that the settlement will solve the most pressing problems. But we will know for sure only when the exact terms have been announced. It's unlikely but not impossible that the state AGs negotiated something of value.

The only advantage this development has for Epic and Match is that the trial will be streamlined. The trial structure was threatening to become very complex, and now the focus at the pretrial conference on Tuesday will be on how to proceed with an Epic & Match v. Google trial. I don't think a trial that will be interrupted by the Thanksgiving holiday is a good idea, but it probably won't be postponed in light of the impending settlement.

Epic and Match may still government support: the DOJ, which supported and may continue to support (at the certiorari stage) Epic's appeal of the decision in the parallel Apple case, could file amicus briefs later on.

On Tuesday morning by Pacific Time, all the parties filed a joint pretrial statement highlighting the differences between their positions. There was no mention of a settlement in that filing: it was totally adversarial. But a settlement was mentioned as a hypothetical possibility in footnote 4:

"Further, while all Plaintiff groups expect to be at trial with the experts they disclosed to Google, there are circumstances that, at least theoretically, could change these plans (e.g., a settlement, a pending Daubert motion, etc.).

Here's that document:

In Re Google Play Store Antitrust Litigation: Joint Statement Regarding September 7, 2023 Pretrial Conference

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Epic v. Google judge chides Google for unrepentance and lying about chat deletion, non-monetary sanctions TBD after April 7 discovery cutoff: implications for United States et al. v. Google

Two months after I wrote that "sanctions loom large" over Google's systematic deletion of chats about legally sensitive topics, that prediction and the fact that this blog has written about the topic more often than any other (non-paywalled) website--see the link list in this recent post--have been vindicated. Yesterday, Judge James Donato of the United States District Court for the Northern District of California, who is presiding over multiple consolidated Google Play Store antitrust cases (brought by Epic Games, three dozen state AGs, Match Group, and class-action plaintiffs), entered his findings of fact and conclusions of law, ordering monetary sanctions first (recovery of attorneys' fees) and announcing that non-monetary sanctions will be determined a little later:

In Re Google Play Store Antitrust Litigation (case no. 21-md-2981-JD, N.D. Cal.): Findings of Fact and Conclusions of Law re Chat Preservation

If this was about the actual merits of the case, that order would amount to

• an entry of liability (Judge Donato finds that Google is guilty of spoliation of evidence),

• a decision on a first minor remedy (recovery of fees, with the exact amount to be determined now), and

• a holding that a remedy of a certain category (at an abstract level, comparable to injunctive relief) is warranted, though more information is needed to make that determination.

• Furthermore, Judge Donato reiterated that a "terminating sanction" won't issue. So what the plaintiffs and Google know now is that there will be a non-monetary sanction that will have an impact on the adjudication of the case (unlike a fee award, which doesn't really matter between those parties), but it won't be fatal to Google's defenses. Comparing this again to a merits decision, it's like a judge saying that an injunction will issue, but it will have to be reasonably narrowly tailored.

Judge Donato notes that "[p]roportionality is the governing concept here." In order to have as solid a factual basis as possible for determining what remedy "fit[s] the wrong," he "would like to see the state of play of the evidence at the end of fact discovery." Fact discovery in this litigation was reopened after Epic and Match were allowed (in mid November 2022) to amend their complaints. As per a stipulation granted by Judge Donato, the cutoff date for that supplemental discovery is April 7 (next week's Friday). Thereafter, "plaintiffs will be better positioned to tell the Court what might have been lost in the Chat communications."

Proportionality must go both ways. Judge Donato "fully appreciates plaintiffs’ dilemma of trying to prove the contents of what Google has deleted." So the really tricky part is still ahead of the court and the parties. The remedy--some jury instruction--must not be disproportionate in terms of penalizing Google to an undeserved extent. At the same time, it would also be unfair if the absence of certain evidence that is totally due to Google's misconduct resulted in inconsequential sanctions.

I believe the minimum hurdle for Epic and its co-plaintiffs will be to show that Google employees likely discussed topics relevant to this particular antitrust litigation--such as "Project Hug" (see the previous link)--by chat. The hurdle for that should not be insurmountable.

The order rebukes the way in which Google has been dealing with this issue:

"Google clearly had different intentions with respect to Chat, but it did not reveal those intentions with candor or directness to the Court or counsel for plaintiffs. Instead, Google falsely assured the Court in a case management statement in October 2020 that it had 'taken appropriate steps to preserve all evidence relevant to the issues reasonably evident in this action,' without saying a word about Chats or its decision not to pause the 24-hour default deletion. [...] The Court has since had to spend a substantial amount of resources to get to the truth of the matter, including several hearings, a two-day evidentiary proceeding, and countless hours reviewing voluminous briefs. All the while, Google has tried to downplay the problem and displayed a dismissive attitude ill tuned to the gravity of its conduct. Its initial defense was that it had no 'ability to change default settings for individual custodians with respect to the chat history setting,' [...] but evidence at the hearing plainly established that this representation was not truthful."

In other words, Google's lawyers are liars according to the order. That's harsh, but it doesn't look like this is formally going to have an impact on the severity of the non-monetary sanctions to be ordered in the coming months. It is, however, the kind of stuff that will hurt Google when it appeals the decision, which I'm sure it will. Google even likes to appeal decisions prior to final judgment, and in another context but related to this litigation it succeeded to the extent that the United States Court of Appeals for the Ninth Circuit accepted to review a consumer class certification now. On that basis, Google has asked the court to postpone the trial in this litigation (PDF), and in a Twitter thread I agreed that Google had a point:

Google is not saying that the litigation as a whole should be put on hold; it's just about the trial. I consider the motion self-serving BUT reasonable.

Google is under pressure here because of the Google Chats issue involving even its CEO, see https://t.co/ceMJDvbLxG

🧵5/5

— Florian Mueller (@FOSSpatents) March 17, 2023

I want Epic and the other plaintiffs to prevail, and Google is not really concerned about litigation economics, but the fact that the Ninth Circuit is reviewing the class certification decision at this stage does warrant a postponement of the trial in my opinion.

Let's briefly also talk about what this means for the other Google antitrust litigation in which the same spoliation-of-evidence issue is now on the agenda: the first United States et al. v. Google case (in the District of Columbia). A little over a month ago, I commented on the DOJ's motion for sanctions. Meanwhile, Google has filed its opposition brief, which just like in the Northern District of California is the epitome of denial:

United States of America, et al., v. Google (case no. 1:20-cv-3010-APM, D.D.C.): Memorandum in Opposition to Plaintiffs' Motions for Sanctions

Meanwhile the DOJ and the plaintiff states have replied in support of their motion, but those documents are sealed for the time being. Anyway, I doubt that Google will be able to persuade Judge Amit P. Mehta to deny that motion in D.C. without an evidentiary hearing. The San Francisco decision isn't binding on him, but strongly suggests that there is an issue to be addressed.

Interestingly, some of the evidence of Google's systematic deletion of chats that the plaintiffs in the Northern District of California present is actually related to topics at issue in the D.C. litigation over Google's search engine monopoly, such as its revenue sharing agreements (RSAs). The last document I'll show you here was just filed a couple of days ago, and it's an unredacted version of a brief by Epic and its co-plaintiffs. I already published the redacted version in my most recent post on that California litigation, U.S. states, Epic Games, others accuse Google CEO Sundar Pichai of 'routinely opt[ing] to move ... to history-off [c]hats to hold sensitive conversations' in violation of retention obligations. The unredacted document makes it a little clearer what happened there, and the fact that Google's CEO himself sought to delete a message is quite interesting. Also, the unredacted material shows that Google employees were quite aware of what they were doing and why, and in at least one case someone even used a smiley, which is totally inappropriate when enaging in spoliation of evidence. Judge Donato apparently wanted that material to be made public first before issuing his order, given that his order makes even more sense against that backdrop. Here's the unredacted document with lots of exhibits:

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-2981-JD): Unredacted Version of PLaintiffs' Supplemental Brief on Google's Chat Production

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U.S. states, Epic Games, others accuse Google CEO Sundar Pichai of 'routinely opt[ing] to move ... to history-off [c]hats to hold sensitive conversations' in violation of retention obligations

Since the "Google Chats" discovery dispute started with a motion by dozens of state AGs, Epic Games, Match Group, and other plaintiffs in October 2022, it has made Google's behavior look worse as more information came to the light of day. The issue has also widened because the DOJ and the same state AGs as in the litigation that was originally started by Epic brought a motion for sanctions in the United States et al. v. Google antitrust litigation in the District of Columbia. Both cases are scheduled to go to trial later this year, and the plaintiffs are seeking trial-related sanctions as opposed to a slap on the wrist.

The latest filing by the plaintiffs in the Northern District of California takes the topic to a new level: Google CEO Sundar Pichai himself is being accused of playing a key role in this. Despite heavy redactions, the following passage is revelatory:

"The newly produced Chats reveal a company-wide culture of concealment coming from the very top, including CEO Sundar Pichai, who is a custodian in this case. In one Chat, Mr. Pichai began discussing a substantive topic, and then immediately wrote: '[REDACTED]' Then, nine seconds later, Mr. Pichai [REDACTED]. [...] When asked under oath [REDACTED]' (Id. Ex. 2, Pichai Dep. Tr. 195:7-12.)

"Like Mr. Pichai, other key Google employees, including those in leadership roles, routinely opted to move from history-on rooms to history-off Chats to hold sensitive conversations, even though they knew they were subject to legal holds. Indeed, they did so even when discussing topics they knew were covered by the litigation holds in order to avoid leaving a record that could be produced in litigation." (emphasis in original)

It's a safe assumption that the above passage tells the story of Mr. Pichai himself having moved a conversation from a history-on to a history-off chat. The first redaction likely means that he realized that the topic should not be discussed with history on, and what he did "nine seconds later" will either have been that he turned history off or that he opened a new chat with history off from the beginning.

This is the filing by Epic and its co-plaintiffs that was made a few hours ago in response to a court order:

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-02981-JD, N.D. Cal.): Plaintiffs' Supplemental Brief on Google's Chat Production

Google was also ordered to make a statement, and unsurprisingly Google continues to deny any wrongdoing or prejudice:

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-02981-JD, N.D. Cal.): Google's Supplemental Breif in Response to the Court's February 27, 2023 Minute Order

From the outside it appears very, very difficult to imagine that Google will get away with what it's done. The courts in California and D.C. will most likely feel forced to impose sanctions. Let us not underestimate how unpleasant this situation is for the two district judges:

• Google's systematic avoidance of discovery obligations cannot be tolerated, or draw only symbolic sanctions, without calling the whole system of pretrial discovery and retention obligations into question.

• Both cases--the Android app store antitrust case in San Francisco and the search engine monopoly maintenance case in Washington--are among the most important U.S. antitrust cases in history. Adverse inferences could make a major impact.

  It would obviously have been preferable for Google not to delete those chats, and then the cases could be decided strictly on the actual evidence. Now it's too late.

Nothing has happened yet about the sanctions motion in the District of Columbia. In California, Judge James Donato has gone to extreme lengths to establish the facts. The discovery dispute there is now getting to the point where a decision will come down.

I also have a brief update on a third Google antitrust case: the ad tech case that was filed in the Eastern District of Virginia in January. Google has requested that the case be transferred to the Southern District of New York, where a multidistrict litigation panel decided to consolidate various other ad tech cases (compared to which Google claims the DOJ's case adds nothing new, though it comes years after some others). Google acknowledges, however, that the DOJ's cases are immune to consolidation. It's just that Google sees no particular reason why that case should be litigated in the Eastern District of Virginia, and it argues that the DOJ's convenience (owing to geographic proximity) is not a major factor. Google may indeed win that venue transfer, given that there is a district judge in New York who's already very familiar with the issues.

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DOJ seeks sanctions over Google's systematic deletion of chats: more cross-pollination between United States et al. v. Google (D.C.) and In Re Google Play Antitrust Litigation (N.D. Cal.)

In the first of its two (possibly soon to be three) Google antitrust lawsuits, the Department of Justice filed a motion yesterday with the United States District Court for the District of Columbia, requesting that Judge Amit P. Mehta impose spoliation-of-evidence sanctions on Google over its systematic deletion of "history off" Google Chats after 24 hours. The motion proposes an evidentiary hearing over this issue.

This is only the latest example of United States et al. v. Google (in the District of Columbia) and In Re Google Play Antitrust Litigation (Northern District of California) being two highly interdependent cases--with some of the interdependencies being more than just procedural in nature. This blog has talked more about the Google chat preservation issue than any other (at least any other non-paywalled) website because the issue first arose in San Francisco (where the plaintiffs are three dozen state AGs, Epic Games (Fortnite), Match Group (Tinder), and some class-action lawyers). The DOJ motion explicitly refers in its D.C. motion to the California case, where an evidentiary hearing over this same issue was already held last month. The DOJ makes it clear that the developments in California inspired the motion in Washington. For example, two of the headlines speak for themselves:

"After The Epic Sanctions Motion, The United States Raised Concerns Regarding Spoliation In This Case"

"The Subsequent Epic Evidentiary Hearing Reveals Document Destruction"

Here are some previous FOSS Patents post on the Google Chats sanctions process in California (in reversely chronological order):

• 01/28/23: States, Epic Games, Match Group show smoking guns for Google's spoliation of evidence by moving sensitive talks to 'history off' chats: sanctions loom large

• 01/25/23: 36 states, Epic Games, Match Group allege Google had 'culpable state of mind' when auto-deleting relevant Google-internal chat messages: Google obviously denies

• 11/17/22: U.S. states, Epic Games, Match Group, consumers get evidentiary hearing over Google's systematic deletion of company-internal chats: Northern District of California, mid January

• 11/11/22: U.S. states, Epic Games, other plaintiffs reinforce motion for discovery sanctions against Google over systematic deletion of chats

• 10/14/22: 36 U.S. states, Epic Games, and consumer plaintiffs seek sanctions against Google for not preserving any relevant Google Chats: by default, all Google Chats are permanently deleted every 24 hours

There have previously been at least two other overlaps, connections, and interdependencies between those two Google antitrust cases:

• The scheduling of the San Francisco trial over Android app distribution was affected by the Washington D.C. trial, which will start on September 12. The witness lists overlap. In order to avoid scheduling conflicts, Judge James Donato scheduled his Google Play Store trial for November. The plaintiffs in that case remain concerned about the potential impact of the Thanksgiving holiday.

• The D.C. case is about Google's monopoly maintenance in the search engine market, and one aspect of it is that Google is the default search engine on Android devices. When state AGs involved with both of those Google antitrust litigations became aware of Google's dealings with other game makers by virtue of the D.C. case, that information was used in their 2021 California complaint, which then got consolidated with the Epic Games and class-action lawsuits that were already pending for about a year. That was the time when Google's "Project Hug" initiative to dissuade game makers from distributing their games outside the Google Play Store became an issue in the California litigation. By now that story has even given rise to a per se claim by Epic and Match, and we've learned that Google paid $360M to Activision Blizzard King alone (and other significant amounts to approximately 20 other publishers).

Back to the Google Chats discovery dispute: Let me first show you the DOJ's motion and then also the most recent minute order by Judge Donato in San Francisco, which shows that the noose may be tightening quickly around Google's neck now.

United States of America et al. v. Google (case no. 1:20-cv-3010-APM, D.D.C.): Memorandum in Support of the United States' Motion for Sanctions Against Google, LLC And an Evidentiary Hearing to Determine the Appropriate Relief

In my interpretation, the motion suggests that the DOJ has drawn a similar conclusion from watching the sanctions process in California as I did when I said (in one of the posts I linked to further above) that Epic and its co-plaintiffs had presented smoking guns. But the DOJ also had to act now with a view to the September trial date. The motion assures the court that the sanctions process does not require postponing the actual trial, and that makes sense--but they couldn't wait forever.

Last spring, Google came away unscathed in D.C. over another discovery issue: its "Communicate with Care" policy, which in the DOJ's opinion abused the attorney-client privilege. Some reference to "Communicate with Care" is also made in the latest motion, but the case for sanctions is now a lot stronger, and the key difference actually relates to what the consequences should be: if evidence has been destroyed, for which there is an extremely strong case here, the solution can't just be to go over a bunch of emails again and revisit privilege assertions like in the "Communicate with Care" context. There has to be an inference.

The DOJ says "Google’s daily destruction of written records prejudiced the United States by depriving it of a rich source of candid discussions between Google’s executives, including likely trial witnesses." Also: "Google destroyed written records covering nearly four years of employee communications, and those records likely would have been especially probative."

More specifically, the DOJ describes the potential impact of Google's systematic-automatic deletion of chats on the D.C. case by pointing to testimony according to which two Google executives chatted--with "history off"--about "Project Banyan, ... a potential collaboration with Samsung on app stores" that according to the DOJ was "worth hundreds of millions of dollars." That Project Banyan is at issue in both the California case over the Google Play Store and the D.C. case. A footnote of the DOJ's motion notes that "[Google executive] Mr. Rosenberg was shown Project Banyan documents during his deposition in [the D.C.] case."

The sanctions process in San Francisco is already at an advanced stage. It seems to me--and I say this with caution because I didn't attend any of the hearings (and the most interesting parts may have happened behind closed doors anyway)--that Judge Donato in California managed the sanctions process very well with his iterative approach. Step by step he obtained clarifications and asked the parties to make their arguments. Last week he entered the following minute order, which suggests that sanctions indeed loom large:

ORDER. For Google's production of additional chats, see MDL Dkt. Nos. 440, 451, Google must at minimum produce all chats that have been preserved for Custodians 1 through 383 (as identified in Dkt. No. 429-2) that are: (1) responsive to any search term the parties have agreed to in this litigation (as proposed by Google in Dkt. No. 451 at 6), OR (2) responsive to these additional terms: "sensitive," "history off," "history is not off," "history on," "history is on," "off the record," or "on the record."

To be clear, for the latter set of terms, Google may not limit its production to only those chats that discussed "turning history 'on' or 'off' in connection with the topics of this case or in connection with [a] legal hold, investigation, regulatory proceeding, or litigation." Dkt. No. 451 at 8. The responsive chats must be turned over without the additional limitation of being responsive to the search terms in this case or being connected to a legal hold, investigation, regulatory proceeding, or litigation.

Google must complete the production of these chats by February 24, 2023, at 5:00 p.m. California time at the latest. This deadline will not be extended. Google may conduct a responsiveness and/or privilege review only to the extent it can do that and still meet this deadline. To the extent Google decides against a privilege review, including for any subsets of custodians, plaintiffs will agree to a "broad non-waiver agreement allowing the clawback of any privileged material," as they have proposed. Dkt. No. 451 at 4.

Signed by Judge James Donato on 2/15/2023.

That's a rather strict tone. Google's lawyers have been trying for a while now to downplay the issue and to put up smokescreens, but Judge Donato wants the truth to come out--and as far as I can see, he's not asking for too much (such as a manual review of millions of documents).

Finally, a quick follow-up to the substantive issues in the D.C. case (United States et al. v. Google I):

Five days ago I wrote about the DOJ's and the state AGs' opposition briefs to Google's motion for summary judgment (U.S. states liken Google's various anticompetitive actions to octopus tentacles; DOJ says 'Google has bought, not earned, at least 33% of all U.S. searches'. Professor Herbert Hovenkamp commented on that, highlighting the key question, which is that defaults are not ties (defaults can be changed by customers, ties cannot):

The U.S. brief relies heavily on defaults, which are not ties. With a market share >90%, are multiple defaults (Android, Apple, several browsers) unlawful? Google notes defaults can be changed. Should their effect be treated as an empirical question? unlawful as a matter of law? https://t.co/FxzMD46mb8

— Herbert hovenkamp (@Sherman1890) February 19, 2023

Google's argument is that this is not really foreclosure, and if it is, then only to a negligible extent because most users would choose Google anyway. But there is evidence that Bing--Google's only competitor (and now even more so than ever)--gets far more usage where Google is not the default search engine. Shortly after the DOJ's and the state AG's opposition briefs, two amicus curiae briefs were filed. The American Antitrust Institute supports the plaintiffs, but what I find more interesting is the following amicus brief by three behaviorial economists (including one from Munich by the way) about the immense Power of Default:

United States of America et al. v. Google (case no. 1:20-cv-3010-APM, D.D.C.): Brief of Behavioral Economists George Loewenstein, Klaus M. Schmidt, and Paul Heidhues as Amici Curiae in Support of Plaintiffs

There'll be more discussion about the Power of Default--in both of the Google antitrust litigations discussed in this post.

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States, Epic Games et al. v. Google jury trial over app store rules scheduled for November 6--another major Google antitrust trial (first DOJ case) starts on September 12

"Remember, remember, the 5th 6th of November" (and the 12th of September):

• Judge James Donato of the United States District has formally approved a case schedule negotiated between Google and the Google Play Store antitrust plaintiffs (three dozen U.S. states, Epic Games, Match Group, and a consumer class action) and set the In Re Google Play Store Antitrust Litigation (case no. 3:22-cv-2746-JD, N.D. Cal.) jury trial in San Francisco for November 6, 2023.

  This means the trial will be interrupted by the Thanksgiving holiday (November 23), though it is unclear whether the trial will be interrupted for a full week or just a very long weekend.

• As previously reported, Google already has a huge antitrust trial coming up in the last third of this year: on September 12, the United States et al. v. Google trial in the District of Columbia will go ahead.

  That case has already impacted the California app store case because of the information the three dozen state AGs obtained through discovery in the D.C. case.

  Google has moved for summary judgment against the DOJ and the state AGs, who have meanwhile filed their opposition briefs, which are sealed for the time being. When Google filed public redacted versions of its SJ motions, I provided an overview of its theories. I don't expect the whole case to go away, so the September trial is going to happen in one form or another.

  It will be a "trying" final third of the year for Google's legal department as the stakes are extremely high in either one of those antitrust cases. The DOJ and eight states recently filed another Google antitrust complaint (over adtech).

The hearing minutes in which Judge Donato stated his approval of the November 6 trial date are primarily about the continued fight over sanctions that may be imposed on Google for systematically moving sensitive discussions to chats that were then automatically deleted after 24 hours. The governmental and private plaintiffs were able to show some smoking guns. Judge Donato has ordered further productions and would like the parties to "meet and confer about which of the relevant custodians still have their history setting turned to 'off' for any of their chats, and whether Google should now change those default history settings to 'on' for the core set of relevant custodians as the parties agree." It looks like some spoliation-of-evidence sanctions are rather likely, and the question may just be how impactful they will be.

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U.S. states, Epic Games, Match Group remain concerned about November trial in Google Play Store antitrust case being impacted by Thanksgiving holiday

Late on Monday, the plaintiffs (36 state AGs, Epic Games, Match Group, and consumer class-action plaintiffs) and Google submitted a joint proposed schedule that would allow their antitrust litigation in the Northern District of California to go to trial in the fourth quarter:

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-02981-JD, N.D. cal.): Joint Statement Re: Proposed Case Schedule and Trial Structure

The two sides managed to work out an agreement on a variety of pretrial deadlines, such as an April 20 deadline for dispositive and Daubert motions, and they are all fine with holding a final pretrial conference on October 19. But there are two case management questions on which the court will have to decide because the parties have different positions and interests.

The parties have sort of agreed that the jury trial will begin on November 6, 2023, but the plaintiffs "respectfully request the opportunity to discuss with the Court the impact of the Thanksgiving holiday on the trial and the possibility of an alteration of the trial date." Google opposes any trial date earlier than November 6 because of a potential conflict with the trial in the first United States et al. v. Google case in the District of Columbia (meanwhile the DOJ has brought a second federal complaint). But as Judge James Donato said at a December 16, 2021 hearing, he anticipates an approximately three-week trial. This means the trial--if it indeed starts on November 6--would be interrupted by Thanksgiving (November 23, 2023).

The plaintiffs were previously concerned about Thanksgiving potentially impacting jury deliberations. That concern was reasonable: while jury deliberations often conclude within a matter of days, it sometimes takes longer, especially in complex cases like this one. With the current schedule, the problem is not that the jury might rush to a verdict because of that holiday approaching, but the trial would have to be interrupted. Many Americans like to take the entire Thanksgiving week off. What will the district court do? If the trial starts on November 6, there are only two weeks before Thanksgiving week, meaning that everyone would have to return after Thanksgiving, listen to another week of testimony, and closing arguments, and then start deliberating.

The court will instruct jurors not to do their own research on the case, such as reading about it on the internet, and not to discuss the case with others. But if the trial is interrupted for a long weekend or a full week, and people spend a lot of time with their families, it's hard to imagine that there wouldn't be at least some violations of that rule. If any such violations become known, jurors have to be disqualified, and at some point there might not even be enough jury members left to render a verdict. It's a tricky situation.

If the trial started right after Thanksgiving, then there would be a conflict with Christmas in the event of protracted jury deliberations.

The trial would be shorter, however, if Google's breach-of-contract counterclaims against Match and Epic were severed from the antitrust case and tried separately. Google argues that "the resolution of the counterclaims will require the presentation of evidence, witnesses, and issues that duplicate the proof presented in the trial on Plaintiffs’ claims"--and that is a valid efficiency argument, though Google's motivation here is simply that it wants to portray Epic Games and Match Group as parties who breached a contract and thereby influence the jury's thinking on the antitrust issues. The plaintiffs have a point that "the claims are irrelevant and hence inadmissible as to States and Consumers and will consume precious time in the trial on core antitrust issues," which is why they will bring a motion to sever those counterclaims.

I regret to say that Google's efficiency-centric argument, while unrelated to Google's actual agenda, appears a lot stronger than the upcoming request for severing its counterclaims can possibly be.

It's unclear whether the trial can really be held before the end of the year. Unless the court simply sets a (much!) earlier trial date than November 6 and tells Google that any conflicts between the D.C. and California trials (such as overlapping witnesses) will be resolved as they arise, it may actually be better to hold a trial in January 2024 that won't be interrupted by a holiday around which people like to take an entire week off. I want the plaintiffs to prevail, and I want them to win as soon as possible in the interest of the app economy at large, but there are logistical issues.

Judge Donato will preside over the continuation of the Google Chat preservation hearing later today, and discuss case management with the parties on the same occasion. The plaintiffs have a strong case for discovery sanctions as I explained a few days ago.

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States, Epic Games, Match Group show smoking guns for Google's spoliation of evidence by moving sensitive talks to 'history off' chats: sanctions loom large

The Tuesday (January 31) hearing related to Google's auto-deletion of chats (as part of the Google Play Store Antitrust Litigation in the Northern District of California) is hardly going to be pretty for Google. I've commented on that sanctions process a few times, most recently on Wednesday (in that post you also find links to my previous articles on that issue), and sometimes it feels like I'm the only one to follow the process in granular detail. But once the court slaps Google with sanctions--which is quite a possibility now--the topic may draw considerably more attention.

Shortly before midnight local time on Friday, the two sides filed their responsive post-evidentiary-hearing briefs. You can find them at the end of this post.

The plaintiffs are going for the jugular by asking for punitive sanctions. But that doesn't mean they're wrong: it's a problem of Google's own making. I must say that some of the evidence referenced in and attached to their latest filing strongly suggests both that Google had a culpable state of mind and that the plaintiffs were indeed prejudiced. Should the plaintiffs' position be overreaching, than only to a gradual extent as far as I can see based on the evidence that has been put out in the open.

Google's argument comes down to saying that there are millions of documents--enough to build a case on--and that even if anything relevant was said in those Google-internal chats, it wouldn't add anything new. Well, with a view to both the "culpable state of mind" and extent-of-prejudice questions, there's some pretty damning evidence of Google systematically discussing sensitive issues in non-saved chats. This is evidence that Judge James Donato may not take lightly. It shows that Google just gives lip service to the preservation of evidence by pointing to its encouragement of using chat history or of saving key messages on email: as the plaintiffs note, it's just not realistic that busy managers will be able to make a determination on whether a chat is or is not relevant to a huge and complex case. The only solution is to save everything and have discovery attorneys take a look. But that's what Google wanted to prevent from happening:

• In a 2018 document, Google discussed "smart replies", meaning that a chat system proposes likely answers; for instance, if someone proposes a meeting, the system may offer such choices as "works for me". In that context, the assumption is stated that if the preservation of a chat's history is turned off, the content may be sensitive (click on the image to enlarge):

  

  "The assumption is that users often turn History off to discuss sensitive topics." And it's anybody's reasonable assumption that a Googler wouldn't have written this is if it wasn't Google's own policy. Indeed, Google's "Communicate with Care" guidelines for employees say that having off-the-record charts is "[b]etter than sending the email [about the same thing], but not without risk."

• The plaintiffs point to a hearing exhibit according to which there were Google-internal instructions that "anything sensitive" should be "move[d] to Chat/video call."

• Then there's a document in the evidentiary record where an employee deleted a passage from a Google executive's talking points (concerning some other gaming platform) and wrote:

  "Since it’s a sensitive topic, I prefer to discuss offline or over hangout." (Hangout was one of Google's chat systems, though it could also be used for screen sharing, voice calls, and video conferences.)

• My favorite smoking gun here is that a Google executive (Larry Yang, who was in charge of Fitbit at some point) made the specific distinction between saved and unsaved chats in connection with legal matters (click on the image to enlarge):

  

• What's similar in nature and even specifically related to Epic's lawsuit is a warning by one Google exec to his colleagues that on-the-record chats "remain in perpetuity" (click on the image to enlarge; I added the arrow that points to the critical passage):

  

It seems that Googlers don't always communicate with care about their company's Communicate with Care program...

My primary concern is that Google's "Project Hug"--an effort that resulted in various anticompetitive agreements with the likes of Activision Blizzard and Riot Games, ensuring their loyalty to the Google Play Store--is portrayed by Google as just some kind of customer loyalty program involving other services such as the Google Cloud Platform and YouTube, but I have no doubt that the driving motivation was to ensure all major mobile games but Fortnite would remain on the Google Play Store, and some of the automatically deleted chats probably contained smoking guns to that effect. And that's a key issue: Epic and Match amended their complaint (for Epic, it was even the second amendment) to allege a per se violation of Sherman Act Section 1 through those contracts.

Based on what has been put forward--which is only a subset of what the plaintiffs were able to present to Judge Donato--it seems to me that Google is guilty as charged.

Finally, the briefs with all of the (public) attachments:

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-2981-JD, N.D. Cal.): Plaintiffs' Response to Google's Brief in Response to the Court's Minute Order Questions Regarding Preservation of Chat Messages

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-2981-JD, N.D. Cal.): Defendants' Reply to Plaintiffs' Responses to Minute Order Questions

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36 states, Epic Games, Match Group allege Google had 'culpable state of mind' when auto-deleting relevant Google-internal chat messages: Google obviously denies

It's getting really serious now in the Google Chats discovery dispute that is part of the Google Play Store antitrust litigation in the Northern District of California (the plaintiffs are Epic Games, Match Group (Tinder), three dozen state AGs, and some consumer class-action plaintiffs). For a recap:

• 36 U.S. states, Epic Games, and consumer plaintiffs seek sanctions against Google for not preserving any relevant Google Chats: by default, all Google Chats are permanently deleted every 24 hours

• U.S. states, Epic Games, other plaintiffs reinforce motion for discovery sanctions against Google over systematic deletion of chats

• U.S. states, Epic Games, Match Group, consumers get evidentiary hearing over Google's systematic deletion of company-internal chats: Northern District of California, mid January

• Google faces two big U.S. antitrust trials in the fall; Epic Games, Match Group, state AGs suggest Google wants to push jury deliberations in Google Play Store case into Thanksgiving

The following screenshot shows the first part of the Google-internal policy at issue (Google Chat Retention Policy; click on the image to enlarge):

Judge James Donato approved the parties' proposed briefing schedule for the Google Chats discovery dispute. The two post-evidentiary-hearing briefs, answering specific questions about what to make of the evidence and what remedies to potentially impose, were due yesterday (Tuesday, January 24). By coincidence, that was the day the United States Department of Justice and eight state AGs filed a second Unite States et al. v. Google antitrust lawsuit (in that case, over ad tech), so some governmental plaintiffs dealt Google two blows on the same day.

Either side is allowed to file a response on Friday (January 27), and the next hearing over the issue will be held on Tuesday (January 31).

Given that there will be another round of briefing, it may be a bit early to predict the outcome, but I'll share my observations based on what I've read so far and what I infer from the court's case management decisions:

I doubt that Judge Donato will ultimately have no problems with Google's conduct. The company argues that it produced millions of documents and seeks to downplay the importance of what was not preserved, but it apparently can't deny the most important allegations the diverse group of plaintiffs has made.

It looks to me like this is now mostly about two questions:

• The Latin term for the first question--whether Google acted with a culpable state of mind--is mens rea, but this here is not a criminal case. The plaintiffs jointly (which is rather meaningful) take the firm position that Google did act with a culpable state of mind. It did mean to deprive the plaintiffs of relevant evidence. Google disputes this and suggests that it had other reasons for auto-deleting internal chats, and points to long-standing practice.

• If Google is held responsible, what should the consequences be?

  • The plaintiffs ask the court to instruct the jury that it's not going to see all the evidence that is relevant, and "should infer that Chat messages destroyed by Google would have been unfavorable to Google in this case."

  • Google says there wasn't really much prejudice (if any) to plaintiffs, and the remedy must be proportionate. It proposes--without actually submitting a specific wording--a "neutral" instruction. Google would then like to present evidence about the chat issue in hopes of persuading the jury that it acted diligently and correctly--and would then like to leave it to the jury to draw whatever conclusions from this mess.

There is no question that what the plaintiffs propose would substantially up the ante for Google in the jury trial in the fall. It's not like a "terminating sanction" that ends the debate: the jury is going to hear and see plenty of other evidence, and won't necessarily assume that the deleted chats prove everything wrong that Google says. But there are contexts in which an adverse inference instruction could tip the scales, such as the question of whether Google's "Project Hug" was about maintaining its Android app distribution monopoly through anticompetitive agreements with the likes of Activision Blizzard King. Some court filings related to Epic Games and Match Group's motion to amend the complaint referred to some evidence that "Project Hug" was about the Google Play Store more than anything else, and triggered by fear of Epic-style defections; I'll talk about that in another post one of these days. Now, if the jury additionally has to assume that Google executives may have said in internal chats that it was all about maintaining the Android app distribution monopoly, that would pave the way for a finding of a per se violation of Sherman Act Section 1. That's just one (but rather important) example.

Was Google's systematic deletion of chat messages so outrageous as to justify such punishment? Let's see what the responsive filings say before the weekend. In another disovery dispute (over a less problematic issue, though), Google came away unscathed in the District of Columbia last year.

I remember at least one mandamus petition by Google ahead of a major trial in the Northern District of California, and wouldn't be surprised if Google immediately appealed an adverse inference instruction to the Ninth Circuit (though appeals courts generally prefer to hear appeals of final judgments, which is why in 2020 the Federal Circuit rejected a mandamus petition over such sanctions), but we're not there yet.

Here are the two post-evidentiary-hearing briefs with all the (public) exhibits:

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-2981-JD, N.D. Cal.): Plaintiffs' Responses to Minute Order Questions

In Re Google Play Store Antitrust Litigation (case no. 3:21-md-2981-JD, N.D. Cal.): Defendants' Brief in Response to the Court's Questions Regarding Preservation of Chat Messages

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Google faces two big U.S. antitrust trials in the fall; Epic Games, Match Group, state AGs suggest Google wants to push jury deliberations in Google Play Store case into Thanksgiving

Three dozen state AGs, Epic Games, Match Group, and some class-action lawyers are suing Google in the Northern District of California over its Google Play Store terms and practices. A first hearing was held last week over the plaintiffs' allegations that Google systematically deleted relevant chats. Judge James Donato gave the parties until yesterday to make a joint submission on how to proceed with respect to the overall case and the Google Chat issue. Here's the document:

In Re Google Play Store Antitrust Litigation (case no. 3:22-cv-2746-JD, N.D. Cal.): Joint Submission [pursuant to the Court's Januaryy 13, 2023 Order]

The Parties have been able to agree on January 31 as their preferred day (among the days offered by the district court) for the next hearing on the chat preservation dispute.

But they cannot agree on the trial date. It's the normal course of business for defendants to prefer a later trial date than plaintiffs do. Here, the issue is not so much the amount of time by which the parties are apart--only three weeks (October 23 vs. October 2)--but the potential impact on jury deliberations and, ultimately, the verdict.

The plaintiffs would be prepared to start on September 25, but in light of the Yom Kippur holiday would much prefer the following Monday, October 2. Google's counterproposal is October 23, arguing that the plaintiffs' proposal "will likely conflict with the trial in United States v. Google in the District of Columbia. Two days ago I summarized Google's summary judgment motions in that case. That trial is scheduled to start on September 12, 2023.

Epic and the other plaintiffs note that the D.C. case is a bench trial, and Google uses different outside counsel in the D.C. and California cases. They also say that any overlap in witnesses could be addressed with "sufficient flexibility". Google, however, argues that this may cause some inconvenience for one trial court or the other, and both the United States District Court for the Northern District of California and the one for the District of Columbia are very busy courts.

The plaintiffs raise a serious concern over something that could affect the outcome:

An October 23, 2023 start date would risk pushing the trial and/or jury deliberations into the Thanksgiving holiday.

Google disputes this, arging that "October 23 is four and a half weeks before Thanksgiving, which is November 23," and Judge Donato "previously indicated that [he] anticipated an approximately three-week trial."

I still consider Epic and the other plaintiffs' concern valid. It's a big and complex case. The jury may very well be finished before Thanksgiving, but what if not? What if a majority of the jurors believe Google violated the antitrust laws, and one or two hold-outs don't? The jury needs to reach unanimity. The court obviously wouldn't be in session on Thanksgiving or Black Friday, and sequestration is not a realistic scenario for this type of case, but even regular weekends always create an incentive for juries to render a verdict.

If the jury can't agree otherwise, it will most likely agree on a finding of no violation. That scenario is what the plaintiffs are presumably concerned about. Their statement does not say so, but that is what I deduce from their statement on the trial date.

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Google paid Activision Blizzard King $360 million for remaining on Google Play Store and not starting its own Android app store, Epic Games' amended complaint reveals

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 October 28, Epic and Match filed a reply brief in support of their motion to amend the complaints.

• 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).

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U.S. states, Epic Games, Match Group, consumers get evidentiary hearing over Google's systematic deletion of company-internal chats: Northern District of California, mid January

While this doesn't necessarily mean that Google will be sanctioned for the systematic deletion of company-internal chats, the plaintiffs in the Google Play antitrust case in the Northern District of California have achieved a potential breakthrough:

Less than a week after the plaintiffs filed their reply brief in support of their motion for discovery sanctions, Judge James Donato of the United States District Court for the Northern District of California has determined that this matter is worthy of further scrutiny. An evidentiary hearing that is anticipated to "go for no more than 3 hours" will be held on January 10, 11, or 12. It's like a discovery-specific minitrial (in court, not arbitration where the term is used more frequently).

Judge Donato's order lays out the agenda as follows:

"In addition to anything else the parties would like to present at the hearing, the Court anticipates testimony by Google witnesses about the use and operation of the electronic chat system, including storage and deletion policies, guidelines for chat content, and examples of typical chat communications. Google will present this information through direct examinations of the witnesses, and plaintiffs will cross-examine. The Court will hear argument on the discovery dispute immediately after the close of evidence." (emphasis added)

In my commentary on the reply brief I said it was difficult to form an opinion on the merits of the motion from the outside: some key passages (quoting testimony) were sealed. What I deduce from the order is that what Judge Donato has seen is serious enough that evidence must be taken. And it appears to be too relevant for the court to just deny the motion on the papers. At the same time, the plaintiffs' preferred sanction, which would be an adverse inference--not like a procedural equivalent of the death penalty, but incisive and impactful. Before the court could do that, Google is given another chance to justify its conduct. But above all, it's a chance for three dozen U.S. states, Epic Games, Match Group, and the consumer class-action plaintiffs to argue that an adverse inference is warranted (or, as a fallback position, a curative instruction).

If not for the Epic Games v. Apple appellate hearing on my Monday (initial commentary considering a remand the most likely outcome; and a follow-up explaining why "failure of proof" is a hurdle that I believe Epic can overcome), this decision to hold an evidentiary hearing over the systematic and automatic deletion of Google Chats would be the most significant development in the App Store antitrust lawsuits this week.

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U.S. states, Epic Games, other plaintiffs reinforce motion for discovery sanctions against Google over systematic deletion of chats

While Epic Games' antitrust action against Apple will be heard by the United States Court of Appeals for the Ninth Circuit on Monday ("November Fortnite"), the simultaneously-filed case against Google over the Google Play Store is still more than six months away from trial. The Apple litigation was put on an extremely ambitious schedule in light of other pending cases, especially the Pepper consumer class action that is a "teenager" by now.

About a month ago, all current plaintiffs against Google--36 U.S. states led by Utah, Epic Games, Match Group, and a consumer class--filed a motion for discovery sanctions against Google over its failure to preserve any relevant chats. By default, all Google-internal chats (using Google chat platforms) are deleted every 24 hours.

On November 3, Google opposed that motion, arguing that the plaintiffs were asking for too much and that Google had done what it could reasonably be expected to do, which is basically just to tell custodians that they should preserve relevant chats:

Google's opposition to motion for sanctions over non-preservation of Google Chats

Late on Thursday, the governmental and private plaintiffs reinforced their request for sanctions:

Plaintiffs' Reply in Support of Their Motion for Sanctions

The part that is--due to redactions--impossible to understand from the outside is where Epic and the other plaintiffs point to evidence that, contrary to Google's representations, those Google Charts have indeed been used for relevant business communications as opposed to mere logistics like "let's meet at 2 PM." But such evidence does appear to exist.

Google stresses that the standard is not perfection: there is a limit as to how much a litigant must do for preservation. The plaintiffs, however, emphasize (in different words) that they're not complaining about the occasional and inevitable oversight, but about the systematic and automatic deletion of virtually all such chats:

"Google produced only 3,084 Chats (many of which were "history on" group chats), roughly 0.1% of the 3.1 million total documents Google has product. [...] That meager number is evidence of deficiency because multiple custodians testifed that they use Chats every day."

I must say that Google's reference to "proportionality" is hard to understand. Given the amounts of data Google stores (and I don't even mean the search engine or other end user-facing services, but even just their internal data), preserving those chats--which would likely happen if the default setting was "history on"--would be less than a drop in the bucket.

This is my favorite passage from the plaintiffs' reply brief:

"Google is one of the most sophisticated litigants in the world, its resources are unparalleled, and it designed the Chat platform at issue. Google could have easily chosen to turn off its own auto-delete mechanism, but it chose not to. In fact, it continues to delete these Chats today. Such conduct warrants sanctions."

In the District of Columbia, Google got away with its "Communicate With Care" policy. The case for sanctions appears stronger now in the Northern District of California, provided that the sealed testimony cited by the plaintiffs shows that some relevant business communications were conducted in the form of Google Chats.

In other Google Play-related news, Google yesterday announced the expansion of its "User Choice Billing" pilot to the United States, Brazil, and South Africa; Google also announced related pilot projects with Spotify and Match competitor Bumble. I have repeatedly criticized "User Choice Billing" as totally insufficient to address competition concerns: it doesn't really enable app developers to save costs unless they strike secret "sweetheart" deals with Google as Spotify and Bumble apparently did. I'll comment on this in more detail on another occasion. Suffice it to say for now that I don't expect "User Choice Billing" to be satisfactory to Epic. Of course, Epic will have to listen to any offers, but in the end it wants the Epic Games Store to be able to compete on a level playing field.

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Epic Games, Match Group reinforce request to challenge Google's 'Project Hug' agreements with game makers like Activision Blizzard King as per se antitrust violations

Three weeks ago, Epic Games and Match Group (the operator of Tinder and other dating services) put forward amended complaints that allege a per se antitrust violation consisting in Google's agreements under which it paid hundreds of millions of dollars to game makers like Activision Blizzard King in order to ensure their loyalty to the Google Play Store. In that case, the legal analysis would be streamlined: Google couldn't proffer procompetitive justifications, and the court wouldn't have to engage in a rule-of-reason balancing.

A week later, Google opposed the motion to amend Epic's and Match's complaints. A few hours ago, Epic and Match responded to Google's opposition:

Epic Games, Inc.'s and Match Group, LLC et al.'s Reply in Support of Motion to Amend Complaints

The dispute over the motion to amend the complaints has three parts:

1. Google claims to be prejudiced because it didn't know during discovery that it would later have to defend against an allegation of a per se violation. "Project Hug" was already addressed in Epic's first amended complaint last year, but not as a per se violation. Now, Epic and Match argue that there cannot be prejudice given that "the per se claims are even simpler, requiring less factual development than a rule of reason claim."

   I can see two potential issues. First, Google may argue that the questions on which a per se claim turns are not a true subset of those of a rule-of-reason claim. Second, even if they were, Google had time limits during those depositions and might have set different priorities.

   While I think Epic and Match should be allowed to amend their complaints, I've said before that maybe some limited additional discovery should be granted to Google.

2. As for the delay that Google alleged, Epic and Match want to refocus the discussion: their proposed amended complaints "were filed over eight months before trial, leaving ample time and opportunity for Google to defend against them." Also, "Match just entered the case in May and did not gain access to Google’s materials until almost two months later." Google may still have an argument that Epic could have brought the amendment sooner, but normally such amendments are allowed and "[d]elay alone is not a sufficient basis to deny" such a motion. It just takes a showing of "good cause"--which is a bit of a hurdle, but not a sky-high one.

3. Epic and Match reject Google's assertion that the per se claims are futile. They say that there are factual issues involved that need to go to trial, and given that a motion to dismiss would be premature, an opposition to a motion to amend the complaints can't succeed either.

Unless Judge James Donato reschedules the hearing or decides to just take the matter under submission (i.e., if he rules without a hearing), there will be a motion hearing in San Francisco on November 17.

While it's not likely to be outcome-determinative, I agree with footnote 7, which explains why it's "off the point" to compare "Project Hug" to Epic's exclusivity agreements for certain game titles to be offered (for certain periods) only by the Epic Games Store. The Epic Games Store runs on platforms where there are no limits on game distribution. The question on those platforms (such as Windows) is not whether game developers set up their own store or promote "sideloading" (direct downloads).

Finally, Epic and Match respond to Apple's "vertical" argument (that game makers provide an input to the Google Play Store as opposed to being horizontal competitors) with what I expected. In my commentary on Google's opposition brief I noted that it doesn't matter whether a (potential) horizontal competitor also has a vertical relationship with the defendant. Epic and Match give the following example: "[I]t would be just as unlawful for Intel to agree with a competing chip supplier like AMD not to compete in the supply of a certain type of chip as it would be for Intel to agree with a customer like Dell or Acer not to compete in the supply of that chip."

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