Conway’s Law, the Mirroring Hypothesis, and the Importance of Technological Considerations in Antitrust Divestitures

The current debate about antitrust divestitures has focused on how combining business units under the same corporate umbrella can allow digital platforms to favor their own services over those provided by third parties. To the extent that these debates have framed the issues in economic terms, they have overlooked the enduring importance of Conway’s Law and the Mirroring Hypothesis, which assert that a firm’s organizational structure must reflect the underlying technology of its products. These principles suggest that enforcement officials should not mandate the structural separation of an existing firm without taking into account the task interdependencies that determine the natural modular structure of a platform industry. Proper analysis of any proposed divestiture will also require antitrust law to shed the reluctance to engage in detailed balancing of technical considerations reflected in its technological tying precedents.

By Christopher S. Yoo¹

I. INTRODUCTION

One of the most prominent issues in the current debates about antitrust law is the extent to which combining business units under the same corporate umbrella can allow big tech firms to favor their own services over those provided by third parties. These concerns about vertical exclusion have led to calls to deploy one of the least frequently used and most powerful remedies available to antitrust enforcement officials and require these companies to divest some of their subsidiaries. They have a