Broadcom’s VMware Licensing Changes Draw Deeper EU Antitrust Scrutiny

EU officials have asked cloud providers about the commercial importance of VMware products, the availability of alternatives and the effects of Broadcom’s revised certification and licensing arrangements, according to Bloomberg, which said it reviewed a series of questions sent to companies in July. The scrutiny follows Broadcom’s $61 billion acquisition of VMware Inc. and concerns that the post-deal changes may be harming customers.

According to Bloomberg, regulators are also seeking information about potentially unfair restrictions stemming from the new arrangements and have requested data on the size of Europe’s public and private cloud markets.

The inquiries come ahead of a March 31 deadline that could leave some cloud providers unable to sell VMware subscriptions through Broadcom’s revamped partner program, Bloomberg reported. The new framework limits those sales to selected providers, potentially eliminating a channel that smaller European cloud companies previously relied upon.

A Broadcom spokesperson told Bloomberg that the company “is aware that the commission is gathering information from various market participants” and remains “engaged” with regulators during the process.

We’d love to be your preferred source for news.

Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!

Add as Preferred Source

The European Commission declined to comment to Bloomberg.

The information requests do not themselves amount to a formal antitrust case. The commission could, however, choose to escalate its scrutiny by opening a formal investigation or seeking interim measures designed to halt disputed business practices while a case proceeds, according to Bloomberg.

Related: Broadcom Loses Bid to Halt EU Antitrust Document Request

European competition rules allow regulators to impose temporary restrictions on suspected anticompetitive conduct, although companies can challenge such measures before EU courts in Luxembourg. Antitrust violations can ultimately carry fines of as much as 10% of a company’s annual worldwide revenue, Bloomberg reported, though penalties generally fall below the maximum and can depend on factors including the duration of the conduct.

Broadcom introduced a series of licensing changes after completing its VMware acquisition in 2023. VMware’s virtualization technology allows cloud operators and other customers to run multiple computing environments on a single physical server, making the software an important part of some cloud infrastructure.

EU regulators previously approved Broadcom’s acquisition of VMware after the chipmaker made commitments intended to preserve access and interoperability for rival Marvell Technology Inc., according to the European Commission’s account of the merger decision cited by Bloomberg.

The latest scrutiny shifts attention from the conditions surrounding the acquisition itself to Broadcom’s subsequent commercial practices. With the March deadline approaching, regulators’ questions indicate they are assessing both the ability of cloud providers to move away from VMware and the potential consequences for competition if smaller providers lose access to VMware subscriptions.