Google's proposed settlement with Epic Games Inc. in a long-running antitrust dispute over how the tech giant operates its mobile app store drew deep skepticism from a federal judge, who repeatedly questioned if it was a “sweetheart deal” for the two companies at the expense of the broader market.
US District Judge James Donato, who has been overseeing the antitrust case, said during a hearing Thursday that he was “taken aback” by parts of the deal between Epic and Alphabet Inc.'s Google. Terms haven't been disclosed, but testimony in court indicated they include a software license, service agreement, an exploratory partnership and attorneys fees.
Donato said in November, when the companies first reached a deal, that he wanted to look closer at the terms and whether they will improve the distribution and monetization of apps on Android phones. The judge, who has the authority to block the settlement, suggested Thursday that it was a “sweetheart deal” that benefited Epic more than other app developers, in exchange for watered-down restrictions on Google's business.
But Epic Chief Executive Officer Tim Sweeney disputed the judge's assessment. He testified that his company is “paying Google off to make the settlement happen,” which constitutes “a significant transfer of value from Epic to Google.”
Settlement Details
According to Donato, the agreement calls for Epic to help market Google's Android, and for Google to help market Epic's Fortnite game. The judge disclosed that Epic will be spending $800 million over six years on unspecified Google services as part of the deal. Sweeney also said the agreement involves access to Epic's Unreal Engine development software.
Stanford University economics professor Douglas Bernheim, who was testifying for Epic in support of the settlement, said the game maker's proposed technology license to Google is below market-rate. Also testifying in support for the settlement was Google's head of the Android operating system, Sameer Samat.
Spokespeople for Google and Epic didn't immediately respond to requests for comment on the hearing.
Judges have approval authority over class action settlements, but don't typically get in the middle of private disputes. Donato said previously the Google-Epic case is different.
“This is a lot more than just a private settlement between two parties,” Donato said in November. “It's a settlement under antitrust laws that have a public interest and consumer protection component that cannot be slighted.”
Modify Order
In order for the settlement to take effect, the companies are asking Donato to modify changes he ordered for Google Play after a jury in 2023 sided with Epic in its lawsuit against Google. Epic had claimed Google engaged in anticompetitive conduct by paying phone manufacturers and popular app developers to exclusively use its app store.
Under the new proposed injunction, much of what Donato ordered would still apply, with some key differences, court filings show. That includes caps on commissions Google can charge for purchases outside the Play Store of 9% or 20%, depending on the type of transaction and the date on which the app was installed.
However, the settlement would nix app catalog access and the distribution of rival app stores in Google Play, in favor of “registered app stores” that will be given equal treatment to the Play Store on devices using Google's Android operating system. The new proposal also applies worldwide for six years, as opposed to the current version that lasts three years and is only targeted to the US.
Bernheim had previously testified that catalog access was the “critical remedy,” according to Donato. But the judge said he was surprised by Bernheim's support for a deal that bars catalog access, which Donato said undermined the professor's previous testimony.
Trade-Off
Bernheim called it a trade-off. “I am absolutely not trying to downplay the importance of any of these things,” he told the judge. Bernheim said the concern was that once Donato's remedy expired, app developers would be back to square one because Google would then have the power to boot them from the Play store.
To assist in his decision, Donato brought on Massachusetts Institute of Technology professor Nancy Rose, who was the Justice Department's head antitrust economist during part of the Obama administration. The “modification eliminates important competitive provisions,” Rose said toward the end of the hearing. “I have considerable concern.”
In a sweeping ruling in late 2024, Donato banned preferential treatment for Google services on Android phones and required the company to let mobile app developers steer customers to lower payments outside of the Play Store. He also ordered Google to make its app catalog available to rival app stores so that they can better build a competing product.
Sweeney said that he first reached out to Google to discuss a settlement in September 2025, shortly after a federal appeals court ruled for Epic and upheld Donato's ruling. He said his company's cases against Google and Apple Inc. “were starting to go our way” and he wanted to avoid protracted litigation with Google similar to his case against Apple.
In the Apple case, Epic has been challenging for several years the iPhone maker's compliance with court-ordered changes to its own App Store.
When asked by Donato about his prior criticism of Google, Sweeney said the settlement would open up Google “fully and completely.”
Donato did not indicate when he would issue a ruling. However, after Glenn Pomerantz, an attorney for Google, said that Donato and Rose “have given us some things to think about,” the judge said he would allow the companies to discuss the situation and submit briefs in February discussing their next steps.
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