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.

Read at SSRN.