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Leveraging Market Power Through Tying and Bundling: Does Google Behave Anti-Competitively?

Benjamin Edelman, HBS Working Paper Number: 14-112. May 2014. Via SSRN - http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2436940

“This paper presents a series of incidents in which Google used tying and bundling to expand its dominance in a number of online markets and into additional markets. The author assesses whether these incidents raise concerns under antitrust law, and concludes that they do. Based on case law of technology companies that have engaged in tying and/or bundling and subsequently been subject to antitrust scrutiny, most notably Microsoft, it appears that Google’s tying and bundling practices could face strong criticism for foreclosing competition. Such scrutiny is particularly important in light of Google’s dominance in a number of online markets. The author also examines both current ties as well as ties Google used historically. The author concludes that Google’s use of tying portends a future of reduced choice, slower innovation, lower quality, and higher prices. Key concepts include:

  • Google’s strategic use of tying and bundling has allowed it to expand its dominance to numerous sectors adjacent to its current strongholds.
  • By tying its new products to its dominant products, Google can effectively compel use of its new products-even if consumers or advertisers prefer alternatives.
  • Google appears to impose rules that are significantly more intrusive than prior Microsoft requirements.”

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