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Google chief Sundar Pichai grilled on the stand in Epic’s app store lawsuit

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Google CEO Sundar Pichai took the witness stand for the second time in a month on Tuesday, testifying in a lawsuit over whether the company uses its popular app store to stifle competition and demand excessive fees.

Epic Games, the creator of the popular Fortnite game, has argued in its lawsuit that Google has created a maze of contractual and technical restrictions around its Android operating system, effectively making the Play Store the only channel through which users can purchase apps. The trial began last week and is expected to go before a jury in mid-December.

Google’s Android is the most used mobile operating system in the world, eclipsing Apple’s iOS. Epic claims that Google made restrictive deals with smartphone makers and mobile networks to ensure no serious rivals emerged for its own store.

Epic claims that Google’s Play Store operating profit exceeded $12 billion in 2021, with a margin of more than 70 percent.

During Tuesday’s proceedings, a lawyer for Epic Pichai asked about Google’s deals with smartphone makers that require them to pre-install the Play Store along with a range of apps on their devices.

Pichai admitted that no smartphone manufacturer other than Apple offers an alternative operating system based on Google’s Android, and that the company requires the pre-installation of a bundle of various Google apps in its contracts with device manufacturers.

Google’s contracts were also at the center of the second lawsuit the tech giant is currently embroiled in, a case brought by the US Department of Justice alleging it abused its dominance in the search market. Pichai testified at that trial in late October and said deals that make the search engine the standard on smartphones and browsers could be “very valuable.”

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Pichai confirmed Tuesday that Google will pay Apple about 36 percent of the search revenue generated on iOS to be the default search engine on its devices. Wall Street analysts previously estimated the company’s payments to Apple at $16 billion to $20 billion per year.

He was also intensely criticized by Epic attorney Lauren Moskowitz over the company’s policy of deleting internal employee communications. The judge overseeing the case later this week summoned Google’s chief legal officer, Kent Walker, to explain the apparent failure to preserve internal company communications that were intended to be preserved for possible use in litigation.

The judge has warned that he may instruct the jury to assume that the information Google destroyed is incriminating.

Under questioning by Epic’s lawyer, Pichai said he was following Walker’s advice to continue the policy of deleting internal chat history every 24 hours, which was introduced in 2008 before he took over as CEO.

A message shown to the court from October 2021, after Epic filed a lawsuit against the company, showed Pichai asking for history to be set to ‘off’ – although the discussion did not involve the Play Store or Android.

“I supported all of the recommendations made by our legal and compliance teams,” Pichai said.

Later, under questioning by Google’s lawyer, Pichai said he had followed instructions to preserve documents related to Epic’s case, and that he had never turned off chat history to prevent communications from appearing in court.

After the jury was dismissed for lunch, the judge questioned Pichai directly about the chat deletion issue, asking him to confirm who was responsible for informing employees about what communications should be retained.

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Pichai said the responsibility ultimately lay with Walker, but that each division within Google has its own legal team needed to keep employees informed of their obligations. Google has since changed its policy around deleting chats and now requires them to be saved, he later told the court.

Pichai said Google competes “fiercely” with Apple’s iOS devices, and Android devices offer an important and cheaper alternative: “We make affordable smartphones possible.”

Epic has also made similar claims of anticompetitive conduct against Apple. The two tech giants have been removed Fortnite from their respective app stores after Epic deliberately bypassed their payment methods. These payment methods charge a 15 to 30 percent fee on digital purchases, which Epic says is excessive.

In 2021, Apple largely emerged victorious, although it was ordered to change rules that prevent developers from referring customers outside the App Store to make purchases.

That ruling was upheld by an appeals court earlier this year, with both sides now seeking review by the U.S. Supreme Court.

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