In a stunning courtroom revelation, U.S. District Judge James Donato expressed deep reservations over a previously undisclosed $800 million agreement between Alphabet Inc.’s Google and Epic Games Inc., questioning whether it undermines the public interest in their long-running antitrust battle over Android app distribution. The deal, which commits Epic to spend $800 million over six years on Google services while collaborating on marketing Android and expanding access to Epic’s Unreal Engine, surfaced during a San Francisco hearing on Thursday. Donato, presiding over the case since its 2023 jury trial, labeled it potentially a “sweetheart deal” that favors the two companies at the expense of broader app developers and consumers.

Testimony from Epic CEO Tim Sweeney and economists highlighted the pact’s scope: Epic would aid Google in promoting Android, Google would leverage Epic’s core technologies, and the arrangement includes joint product development and partnerships tied to Fortnite. Stanford economist Douglas Bernheim testified that Epic’s technology license to Google is below market rate, while MIT professor Nancy Rose warned the settlement could erase key competitive provisions from Donato’s prior injunctions. Sweeney countered that the deal represents a “significant transfer of value from Epic to Google,” not preferential treatment.

Judge Donato’s pointed skepticism dominated the proceedings.

Donato, taken aback by the disclosure, probed whether the partnership softened Epic’s push for systemic Android reforms. “It looks like a payoff,” he remarked, according to Digit.in. He ordered briefs by February to assess if the settlement meaningfully boosts competition in mobile app distribution, emphasizing the case’s implications beyond a private dispute. Bloomberg reported Donato repeatedly questioning if the accord weakens remedies for the market, drawing parallels to Google’s past “Project Hug” efforts to lock in developers with payments.

The settlement, proposed in November 2025, would cap Google Play commissions at 9% to 20%, allow third-party app stores like Epic’s globally for six years, and replace U.S.-only injunctions with worldwide terms. Yet, it scraps mandates for app catalog access, opting for equal treatment frameworks. This follows a 2023 jury verdict finding Google monopolized Android apps through exclusive deals, a ruling upheld by the Ninth Circuit.

Roots of the Epic-Google Clash Run Deep

Epic’s 2020 lawsuit stemmed from Google removing Fortnite from the Play Store after Epic bypassed its billing system to avoid 30% fees. The dispute exposed Google’s strategies, including revenue-sharing pacts worth hundreds of millions to keep publishers from rival stores. Wikipedia’s entry on Epic Games v. Google details how Epic sought injunctive relief for fair competition, not damages, affecting millions of consumers and thousands of developers.

Court filings revealed the $800 million deal’s contours: Epic pays for cloud services it claims it needs anyway, grants Google expanded Unreal Engine use for AI and cloud, and commits to mutual marketing. The Verge, citing hearing transcripts, noted Sweeney clarifying no joint product but separate lines with collaboration plans. Android Authority highlighted Donato’s worry that Epic’s business ties diluted demands for changes benefiting all developers.

Settlement Terms Spark Broader Debate

If approved, the pact mandates Google support sideloading and alternative stores without objection, potentially lowering barriers for apps like Epic Games Store. Business Today reported Donato allowing confidentiality on details but voicing concerns over favoritism. PocketGamer.biz echoed that the revelation amid settlement talks raises integrity questions for the antitrust process.

Google’s app store generated over $50 billion in 2024 developer payouts, per prior filings, but critics argue fees stifle innovation. The deal’s global reach contrasts U.S.-focused original remedies, per Yahoo Finance. On X, users like @Pirat_Nation posted: “Epic pays Google this amount for various services, while collaborating on Unreal Engine access… The judge expressed concern that this may have led Epic to moderate its demands.”

Expert Testimony Underscores Conflicts

Bernheim’s analysis pegged the license as undervalued, benefiting Google. Rose cautioned modifications could nullify Donato’s 2024 injunctions against anti-steering and tying. MLex noted executives defending the agreement amid judicial and economist skepticism. The Information’s briefing captured Donato questioning the $800 million partnership’s influence.

For developers, outcomes hinge on approval: fee caps offer relief, but weakened sideloading mandates may preserve Google’s edge. MobileSyrup stressed Donato’s fear Epic softened stances due to the deal. As briefs loom, the saga tests whether private pacts can reconcile with antitrust mandates.

Industry Ripples Extend to Gaming and Beyond

Epic’s mobile store hit 29 million users by 2024 end, short of 100 million goals, per Reuters—unrelated but contextualizing ambitions. Fortnite’s Android return via sideloading preceded this; now official support could boost traction. WebProNews flagged favoritism risks in the alliance.

X discussions, including @business_today linking Business Today’s coverage, amplify scrutiny. Heise Online noted Epic paying Google over six years, with Donato viewing critically. Law360 reported doubts on correcting Google’s conduct, ordering evidentiary hearings.