Broadcom-VMware: CISPE requests cancellation of acquisition

CISPE (Cloud Infrastructure Service Providers in Europe), an association representing many European cloud providers, has appealed to the General Court of the European Union (GC) against the approval of Broadcom 's acquisition of VMware . Meanwhile, some VMware customers have reported being unable to download security patches.

CISPE requests the cancellation

The acquisition was announced in late May 2022. Broadcom paid $61 billion to acquire VMware's assets. About seven months later, the European Commission launched an investigation to assess possible restrictions on competition. By mid-April 2023 , the identified issues had been communicated, including those related to interoperability between VMware software and the networking devices of Broadcom's rivals.

Following its investigation, the European Commission approved the acquisition, subject to Broadcom's compliance with certain conditions. According to CISPE, the Commission did not impose any conditions to prevent a dominant position or to mitigate the potential abuse of that position. The association believes that there are errors of law and clear deficiencies in the evaluation process sufficient to justify annulling the decision .

CISPE points out that since the acquisition was finalized, Broadcom has unilaterally terminated existing contracts (often with just a few weeks' notice) and imposed new licensing terms with cost increases and mandatory multi-year commitments for access to VMware software.

In mid-July, Broadcom announced restrictive new licensing terms that could exclude smaller cloud providers, including many CISPE members. These providers could be prevented from purchasing and reselling VMware-based cloud services. CISPE reported these unfair practices, but no action was taken.

A Commission spokesperson said the decision will be defended in court. Broadcom commented :

Broadcom strongly disagrees with these allegations. The European Commission, along with 12 other jurisdictions worldwide, approved our acquisition of VMware following a thorough merger review, and we will honor the commitments we made to the Commission at that time. We continue to offer our customers better choices and solutions to address their most complex technology challenges.

The acquisition is unlikely to be cancelled, but CISPE could secure better contractual terms for European providers.

Broadcom has discontinued selling perpetual licenses for VMware software to focus on subscriptions. Existing VMware customers can keep their current license, but will lose support. They will, however, continue to receive patches for zero-day vulnerabilities.

The aforementioned customers were unable to download the patches released in mid-July. Broadcom stated that they will receive the patches later. This appears to be a tactic to pressure VMware customers into subscribing.