If A and B are groups, then the external direct product A x B is indeed a group. For subgroups A' of A and B' of B, the product A' x B' is a subgroup of A x B if it contains the identity element, is closed under multiplication componentwise, and includes inverses. The discussion emphasizes the importance of these properties to confirm that A' x B' is a subgroup. Therefore, the conditions for subgroup formation in the context of direct products are crucial for validating subgroup status. Understanding these criteria is essential for group theory applications.