Google's Strategic Talks Revealed: Alliance Considered with Tencent to Acquire Epic Games

Recent revelations from the Epic v Google trial unveil Google's past considerations in 2018 regarding a potential collaboration with Tencent to acquire full ownership of Epic Games, the creators behind the global sensation Fortnite.

Google's Quest for Gaming Supremacy

In a bid to make significant inroads into the gaming industry, Google contemplated teaming up with Tencent, eyeing complete ownership of Epic Games. This move was fueled by Google's ambitions within the gaming sphere, particularly driven by its now-defunct game streaming platform, Stadia.

Strategic Moves for Gaming Domination

During 2018, Google aimed to solidify its stance in gaming and weighed multiple options to enhance its gaming portfolio. It sought significant investments in content infrastructure, initially exploring high-profile deals for Stadia and later pivoting towards establishing its first-party labels and engaging third-party publishers.

The Proposal: Google-Tencent Collaboration

Former Stadia lead, Phil Harrison, proposed a groundbreaking idea to Google: an alliance with Tencent to acquire all shares of Epic Games. This strategic maneuver aimed to leverage Fortnite's colossal success, which raked in an astounding $5.5 billion in revenues, making it a dominant force in the gaming industry.

Alternate Strategies in Consideration

In case the complete acquisition plan faltered, Google pondered a 20% stake purchase in Epic for a substantial $2 billion. Insights from court proceedings shed light on email correspondence between Google executives outlining preliminary strategies for the gaming platform.

Strategic Rationale for the Venture

Email exchanges revealed discussions on the potential impact of an Epic Games acquisition on various Google domains, including YouTube and Google Cloud Platform (GCP), aiming to tap into Fortnite's significant user base and potentially migrate players from other cloud services.

Tencent's Role in the Proposal

The discussions highlighted contemplation on approaching Tencent to either acquire Epic shares from Tencent directly or form a collaborative front with Tencent to secure complete ownership of Epic Games, outlining possibilities for substantial collaborations and business developments.

Profit Margins and Ownership

Additionally, it surfaced that Google garners a substantial 70% operating profit margin from the Google Play Store, primarily driven by in-app purchases, particularly from gaming and social media platforms.

Presently, Tencent holds around 40% ownership in Epic Games, while Sony Corp. possesses approximately a 5% stake in the company, contributing to Epic's valuation soaring beyond $31 billion.

Also Read: Epic Games CEO Tim Sweeney Testifies Google Wields Dominance over Android App Distribution

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