This article analyzes the effects of regulation that restrict the conglomerate firms to participate in the public procurement of software. The regulation was implemented in 2013, and this article analyzes five years of firm performance before and after 2013 through DID (difference-in-difference method). In particular, this article analyzes how restrictions on conglomerate firms' participation in public software procurement affect middle and small firms performance. As a result, small-size firms achieve relatively positive results in private sector revenues compared to mid-size firms. However, there was no significant difference between the mid-size and small-size firms in profit margin. This study implies that the new policy is needed to improve the small and medium-size firms revenues on the private market by leveraging the public procurement market which restricted the conglomerate firms to participate. This can be done by complementing the regulation in line with servitization paradigm.