The Law and Economics of Tying in Digital Platforms: Comparing Tencent and Android

Tying has become a common practice in digital platforms. It may generate both pro-competitive effects and anti-competitive effects, which makes it difficult to distinguish between lawful and unlawful tying practices. The cases of Tencent and Android both involve tying conducts, but interestingly, the cases have different outcomes. This article explores reasons for these different case outcomes from a comparative law and economics perspective. By assessing the facts and legal rulings in Tencent and Android, we find that the different case outcomes result, on the one hand, from the different case facts, and on the other hand, from the different approaches used by the EU Commission and the Chinese Supreme People’s Court. The Court scores better in terms of ensuring legal certainty; nevertheless, it may face difficulties when it has to apply economic analysis. The Commission seemingly uses more economics, but the application is not full-fledged, as it disregards important case facts when assessing competition foreclosure, and employs asymmetric legal tests and evidence standards for anti/pro-competitive effects of tying. From a law and economics perspective, we provide suggestions for China and the EU, taking the recent Anti-Monopoly Guidelines on Platforms in China and the forthcoming Digital Markets Act in the EU into account.