Tying in the age of algorithms

Abstract

The emergence of algorithms poses fundamental challenges to competition law. The issues of algorithmic collusion and personalized pricing from the perspective of price discrimination have been extensively studied and are relatively well understood. What has escaped the attention of scholars and enforcers is the possibility that personalized pricing facilitated by algorithms may alter the way market power is exercised and abused. Predatory pricing is probably the most obvious candidate for an abuse whose nature may be altered, perhaps fundamentally so, by personalized pricing. It turns out that tying is another abuse that is ripe for transformation by algorithms. This Article explores how the market power threshold, the potential theories of harm, and possible pro-competitive justifications for tying may need to be reconceptualized as a result of personalized pricing.