There’s an App for That: Tying and Bundling in the Smartphone Industry

Abstract

As smart technologies become more prevalent and mobile devices become the digital platform of choice, how will antitrust law adapt? While current tying law has been criticized for its reliance on dated physical product precedents, the principles of tying and bundling doctrines are well-suited to address the next technology-based product combinations and integrations. Smartphones are an ideal foil for emerging antitrust issues, as these devices stand at the crossroads of tying and bundling inquiries. Integration of a smartphone mobile operating system (“mOS”) with an application clearinghouse exemplifies the types of challenges that will test current tying and bundling doctrines. These dynamic high technology products exhibit a dual nature, as they are easily cognizable as separate products, yet they can also be characterized as a single product. This Note examines several permutations of tying tests to draw out the consequences of treating smartphone technologies as single or multiple products under the law.To ensure the viability and increase the efficacy of current tying and bundling applications by courts, this Note recommends that (1) non-equilibrium-based assertions by either plaintiffs or defendants should be recognized as the exception, not the norm; (2) flexible rule of reason analyses should be utilized in high-technology industries; and (3) evidentiary tools, such as natural experiments and price-indexes, should be considered a permissible inference of anticompetitive arrangements. Although it is unorthodox to suggest that current tying and bundling law does not need to be significantly altered in order to address the issues raised by dynamic high technology industries, effective integration of evidentiary and econometric analyses rises to the challenge — while maintaining a modest role for antitrust in the economy.