According to media reports, Epic Games, the developer of the "Fortnite" game, has won an important victory in its antitrust lawsuit against Google in a U.S. court. The jury unanimously ruled that Google has a monopoly position in the Google Play app store and in-app payment service (Google Play Billing) market and abused this position to cause harm to Epic Games. Google has said it will appeal the case.
According to media reports, Epic Games, the developer of the "Fortnite" game, has won an important victory in its antitrust lawsuit against Google in a U.S. court. The jury unanimously ruled that Google has a monopoly position in the Google Play app store and in-app payment service (Google Play Billing) market and abused this position to cause harm to Epic Games. Google has said it will appeal the case.
The case is not complicated. For game apps downloaded from the Google Play app store, Google will charge a 30% share fee when users pay. Epic’s “Fortnite” game deliberately bypasses Google’s billing system and allows customers to purchase directly through the app. Google immediately removed "Fortnite" from the Google Play store, and Epic filed a lawsuit, believing that Google was suspected of monopoly and asking the court to find that Google abused its market dominance.
Interestingly, in a similar case involving Epic Games v. Apple for abusing its market dominance in the App Store (Epic’s “Fortnite” also circumvented Apple’s billing system and allowed customers to purchase directly through in-app, which was then removed from the store, and then Epic sued Apple), Apple currently won the first instance. In fact, Google is more lenient than Apple when it comes to the issue of self-built app stores. Users can install third-party app stores on mobile phones equipped with Google's Android operating system, but users are prohibited from installing them on Apple phones. Mobile phones equipped with Google's Android operating system can also install applications from non-Google Play app stores, but Apple phones cannot.
The author personally believes that the more open company was hit harder, which may be related to a major difference between the two cases: Google was smart and destroyed or deliberately did not save all the internal company chat record evidence related to the case over a period of more than 1,300 days, while Apple's case did not have this situation. When reviewing the information, the author found a memorandum of a case in which the U.S. Department of Justice and several states sued Google for allegedly spending huge sums of money to purchase the default search engine for browsers from mobile phone manufacturers. The document requested sanctions on Google for destroying documents in the case. It also recorded in detail the destruction of evidence by Google in the related Epic v. Google case. I will introduce it to you today. We will also discuss, if in China, what would be the penalty for destroying evidence in an antitrust case?
1. Google designed the function of deleting chat records the next day many years ago.
Google has designed a "next day deletion" feature for its "Hangouts" chat tool, which it uses its own software for written communications, including chat. This allows employees to manage the privacy of their conversations, and chats created with history turned off are typically destroyed by Google 24 hours after creation.
But the people in this case who have Google's obligation to keep evidence - including possible trial witnesses - deliberately conducted substantive sensitive business discussions through the "Hangouts" chat platform when the history was set to "off". And Google knows its employees use a "delete next day" feature to avoid leaving a trace of discussions. In July 2019, the company concluded in a release document that "users who frequently use...are more likely to discuss sensitive information." In fact, as part of Google's "Communicate with Heart" initiative, Google trains employees on the benefits of sending "Delete Next Day" chats. A training document explains that "deleting Chats the next day is more effective than sending an email and "will not be retained by Google like email."
The author believes that work content should be retained by default. For example, when you use Feishu and DingTalk, which have similar "Hangouts" functions, it is unimaginable to set chat records not to be retained. It can be said that there are rational flaws in the initial setting of this function.
2. In the early stage of the lawsuit, Google concealed the function of deleting chat records the next day.
The Justice Department and states argued that Google's obligation to preserve documents began when it reasonably anticipated litigation. As early as May 2019, Google began withholding material "relevant to the Department of Justice's ongoing investigation," according to the company's privileged logs. Subsequently, the U.S. Department of Justice and the prosecuting states issued the first Civil Investigation Demand (CID) to Google on August 30, 2019, and issued two subsequent Civil Investigation Demands and an Electronically Stored Information Questionnaire ("ESI Questionnaire") in October 2019. The Questionnaire defined the "Electronically Stored Information Questionnaire" as "referring to electronically stored information used in the Federal Rules of Civil Procedure."
Google responded to the Electronically Stored Information Questionnaire on November 20, 2019, stating that it has two primary written policies related to document retention, which govern the retention of email, general documents, legal holds, and other topics, as Attachments A and B, respectively. But Google did not mention or include any other document retention policies in its questionnaire responses, including the destruction of chat logs in this case. Google said it had taken legal action and the files, including version history, would be saved from the date of collection. The hold notice also instructs the custodian to preserve relevant documents.
But instances in this lawsuit involving evidence custodians show that over the years, Google employees intentionally shifted conversations away from email and toward chat, sometimes with explicit requests to keep history turned off. (E-mail between potential trial witnesses Ana Kartasheva and Jim Kolotouros, July 27, 2021: "We should chat live so you can get a history, preferably not in an email."); (Roundtable breakfast with Don Harrison, May 2019, comment: "Since this is a sensitive topic, I prefer to discuss it offline or via AFK.")
Although the antitrust lawsuit against Google was filed by the U.S. Department of Justice, this case is theoretically more like a civil lawsuit in my country than an administrative investigation. Compared with the procedures in the United States, my country’s Antitrust Law gives administrative agencies greater power. Article 47 of my country’s Antitrust Law stipulates that, After making a written report to the principal person in charge of the anti-monopoly law enforcement agency and obtaining approval, the anti-monopoly law enforcement agency may inspect and copy relevant documents, agreements, accounting books, business correspondence, electronic data and other documents and materials of the operator under investigation, interested parties or other relevant units or individuals. The hangouts chat records in this case should be electronic data and other files and materials.
If Google were in China, if it wanted to conceal the function of deleting chat records the next day, the legal consequences would be very serious. Article 62 of the Anti-Monopoly Law stipulates that for review and investigation carried out by anti-monopoly law enforcement agencies in accordance with the law, refuse to provide relevant materials and information, or provide false materials and information, or conceal, destroy, or transfer evidence. , or otherwise refuses or obstructs the investigation, the antitrust law enforcement agency will order it to make corrections and impose a fine of less than 1% of the previous year's sales on the unit... The author checked and found that Google's revenue in 2022 was US$282.8 billion, so if this matter was in China, the maximum fine could be US$2.828 billion.
3. Google issued a written policy requiring the destruction of historical chat records after 24 hours.
The U.S. Department of Justice and various suing states negotiated with Google over the preservation and collection of materials, but Google's communications repeatedly obscured the fact that Google continued to destroy employee chat logs. Although Google has been destroying historical chat logs for years, when this case was filed in October 2020, the company did not have a file retention policy specific to chat logs. Google did not have a separate written chat history retention policy before November 2020. But in November 2020, Google instituted a written policy requiring the destruction of historical chats after 24 hours. The document explains that Google’s previous policy stated that when message history was set to off, the default deletion time was 24 hours: At Google today, history is turned off by default for everyone.
The November 2020 policy explains that employees can change the default history. Same as above. In February 2022, Google revised this chat history retention policy to remove any reference to individuals being able to change their default chat history retention settings. Google is hiding its new chat history destruction policy, despite promising to supplement its responses. It was not until January 2023 that Google provided this new written policy to the U.S. Department of Justice and each suing state.
4. In the middle of the lawsuit, Google went from denying to relenting
Throughout the fact-finding process (December 2020 to May 2022), Google repeatedly assured the U.S. Department of Justice and the various prosecuting states that the company was saving and collecting chat logs in the manner it began in November 2019, without identifying any limitations on saving or collecting chat logs.
For example, in April 2021, Google confirmed that "it is producing response documents from the same data sources it had in custody during the investigation before the Department of Justice seized evidence." A few months later, Google wrote: "We reiterate that we are collecting and searching Google as part of the same process we use to collect emails. Following meetings with Google attorneys in 2021, DOJ and each prosecuting state's attorney documented DOJ's and each prosecuting state's understanding."
Similarly, in March 2022, the U.S. Department of Justice and various suing states challenged Google's production of chat records, pointing out that although "Google employees often use instant messaging to communicate on matters related to this case," the company appears to have produced only a few hundred chat records. In response, Google once again assured the U.S. Department of Justice and the suing states that the company had followed the "agreed review procedures" of both parties. Google has never mentioned its policy of deleting chat history every 24 hours.
But in the case of Epic v. Google, Epic filed a motion for sanctions against Google for destroying chat records. After the case statement concluded in November 2022, the court ordered a hearing on the "Google Electronic Chat Data Disclosure Dispute." The hearing will be held in January 2023. In a letter dated November 23, 2022, the U.S. Department of Justice and the various suing states requested that Google provide information about its litigation retention and chat record retention policies.
The U.S. Department of Justice and the prosecuting states wrote again on December 5, 2022. Google again declined to respond. On January 11, 2023, after talks about Google’s retention policy, Google acknowledged “next day deletion” for the first time. Chats are automatically deleted within 24 hours: All unlisted chats are deleted within 24 hours and are not automatically retained for legal holds, however, listed chats (which typically have a 30-day or 18-month retention period depending on the type of chat) are automatically retained for evidence custodians required by law.
5. Evidence hearing in the Epic case revealed the problem of document destruction
On January 12, 2023, Epic held an evidentiary hearing on Google’s destruction of evidence. Epic proceedings show that at least nine evidence custodians overlap with the case, and each is a potential trial witness. Documents and testimony provided by Google at the evidentiary hearing in the Epic case show:
Google's chat history retention policy is to retain chat history for 24 hours if history is turned off. Google sets the default retention history for chats to "off" for most categories of chats. Employees are aware that "delete next day" chat history will be irreversibly destroyed after 24 hours. Google had the "technical capability to set history on as the default for all employees on legal hold" but failed to do so. When chat history is turned on, "it only applies 24 hours later to messages sent after the setting was changed."
At the end of the Epic hearing, Judge Donato noted that: (1) Google's chat features may actually contain relevant evidence; (2) Google does not systematically save these chat records, leaving it up to each person who receives a withholding notice to decide whether to save chat records; (3) Google never monitors chat records to determine whether relevant evidence may be lost. Judge Donato ordered Google to provide more information to the plaintiffs. In response, Google admitted that during the past five years of litigation, Google had never turned on chat history to save all chat records of the individuals involved.
In Epic's closing argument, Judge Donato said: "We've seen all the evidence, the Google training and other documents saying: Hey, if it's sensitive information, you might want to use a chat tool. It's obvious to any objectively reasonable attorney that the chat tool might contain relevant evidence..."
6. Google forced to provide policy on destroying evidence
On January 30, 2023, Google provided the company’s current and previous versions of its chat record retention policy to the U.S. Department of Justice and various suing states for the first time. The company also provided unedited versions of destruction briefings from both sides in the Epic case.
The documents, which include new ones in addition to publicly available documents, show that Google employees blocked sensitive conversations by keeping a log of historical chats. However, Google still declined to provide documents from its lawsuit. On February 7, 2023, after another meeting and negotiation, Google finally agreed to stop automatically deleting historical chat records before get off work on February 8, 2023; but this date was later postponed to February 9, 2023.
The DOJ and the states argued that Google's lapses in preserving the Electronically Stored Information Questionnaire were evident in its carefully planned decisions to create a 24-hour auto-deletion feature for chats with history turned off, to set many chats to a history-off default, and to maintain auto-deletion in the face of anticipated and ongoing litigation. In fact, after the plaintiffs filed this lawsuit, Google doubled down on its "next day delete" policy by enacting a separate, chat-specific retention policy in November 2020—just weeks after the lawsuit was filed—that explicitly stated that messages that turned off history would be destroyed after 24 hours. Therefore, Google cannot claim that chat messages were deleted "unknowingly or accidentally."
Google knows its employees discuss substantive business via chats, and those chats are irreversibly destroyed after 24 hours. However, Google "took no steps" to suspend the automatic deletion policy or monitor whether employees retained potentially relevant chat logs. Furthermore, not only did Google commit the vandalism over the course of several years, but the company's vandalism was "even more egregious" as it continued to vandalize historical chats even after the lawsuit began.
In the face of challenges raised by Epic in 2022 and subsequent investigations by the U.S. Department of Justice and various suing states, Google refused to change (or even disclose) its automatic deletion policy. Only when faced with a motion for sanctions did Google respond and eventually agreed to stop destroying files. In short, Google knowingly destroyed the documents until the risk of sanctions prevented further destruction.
7. If this case is tried in a Chinese court, Google will also lose.
In the author’s opinion, Google’s behavior of designing the “Next Day Delete” function and using it to evade the burden of proof in antitrust litigation is a typical example of being clever and suffering big losses. From the results, it can be seen that although Apple is closed, they honestly submitted evidence and defended themselves legally in the lawsuit, and were not found by the court to constitute an illegal monopoly. And Google’s Android system is actually better than Apple’s system It is very open, but it is judged as an abuse of market dominance. There is a high probability that the jury and the court believe that Google’s behavior is ulterior motives and deliberately concealed important evidence, so this part of the unpreserved evidence can be considered detrimental to it. This is not just one or two records, but more than 1,300 days of internal communication records within Google. The more you destroy, the more serious the legal consequences you will bear.
In fact, on this issue, our country's laws and regulations are similar to those of the United States. Article 112 of my country's Judicial Interpretation of the Civil Procedure Law stipulates: If the documentary evidence is under the control of the other party, the party that bears the burden of proof may apply in writing to the people's court to order the other party to submit it before the expiration of the time limit for producing evidence. If the reasons for the application are established, the people's court shall order the other party to submit the documents, and the expenses incurred for submitting documentary evidence shall be borne by the applicant. If the other party refuses to submit without justifiable reasons, the people's court may determine that the content of the documentary evidence claimed by the applicant is true. If this case is heard in our country's courts, it will also be determined that the missing company-wide chat records of more than 1,300 days are detrimental to Google, causing it to lose the case.
Finally, Epic's lawsuit against Google is just one of Google's many antitrust lawsuits. The author wrote in "Signing a Ten-Billion Dollar Agreement with Apple and Samsung. Can Google Win the Antitrust Lawsuit?" As mentioned in the article, the U.S. Department of Justice filed two antitrust lawsuits against it. One was a case in which Google spent huge sums of money to bind mobile phone manufacturers to the default search engine for mobile browsers and was suspected of being a monopoly. The other was an accusation that it had an illegal monopoly in the advertising model. It also represented websites and advertisers, and it also ran an online advertising exchange. It was just like being a brokerage firm such as Goldman Sachs and Morgan Stanley, and also doing work for the New York Stock Exchange. There was a serious conflict of interest. These two cases will also involve the problem that Google cannot provide all internal chat records for more than 1,300 days due to the next-day deletion function, so it may be punished again for this problem. In short, I think they're pretty good.
The author of this article: You Yunting, senior partner of Shanghai Dabang Law Firm and intellectual property lawyer. Tel: 8621-52134900, Email: [email protected], this article only represents the author’s opinion.