EU Launches Probe into Broadcom’s VMware Tactics

The European Commission has launched an investigation into Broadcom following alterations to VMware’s software licensing and support terms, raising concerns among EU business users and a trade group. This inquiry aims to scrutinize the changes implemented by the US chipmaker after its acquisition of the cloud computing company VMware.

A spokesperson for the EU competition enforcer disclosed, “The Commission has received information suggesting that Broadcom is changing the conditions of VMware’s software licensing and support.” This statement underscores the regulatory body’s intent to thoroughly investigate the matter, per Reuters. 

Complaints have emerged from Beltug, a Belgian association, alongside its counterparts in France, the Netherlands, and Germany, who last month voiced their concerns to key EU figures including antitrust chief Margrethe Vestager. The grievances centered on abrupt policy shifts by Broadcom, which allegedly led to significant price hikes, re-bundling of licenses, a prohibition on license reselling, and a refusal to uphold security conditions for perpetual licenses.

Related: Broadcom Set To Receive Approval For $61 Billion Acquisition Of VMware

Additionally, CISPE, a trade body with members like Amazon and 26 small EU cloud providers, has accused Broadcom of unilaterally terminating license terms for crucial virtualization software. This move has sparked further scrutiny into Broadcom’s practices post-acquisition.

In response to the backlash, Broadcom CEO Hock Tan announced changes aimed at placating VMware customers. “We have dramatically reduced the price of VCF (VMware Cloud Foundation) to promote customer adoption,” Tan stated in a blog post, highlighting the company’s efforts to adjust its pricing strategy and remove technical barriers for customers transitioning between cloud and on-premise data centers.

Tan further elaborated on the company’s shift towards a subscription model for VMware, a process initiated in 2018, which will not impede customers’ use of their existing perpetual licenses. This move is seen as an attempt to modernize VMware’s service offerings while addressing the concerns raised by the European Commission and affected stakeholders.

Source: Reuters