Broadcom could face EU antitrust fines over 'punitive' VMware contract terms

[Alfonso Maruccia]

Editor's take: Broadcom aims to convert every valuable customer into a recurring online subscriber. The company has achieved notable financial success with this approach. However, regulators may soon scrutinize its business practices, raising the possibility of costly antitrust fines that could impact its future growth.

The European Cloud Competition Observatory (ECCO) is a monitoring group founded by CISPE, a non-profit trade association of European cloud providers. Created as part of CISPE's antitrust settlement with Microsoft, ECCO now has its sights set on Broadcom and its conduct following the acquisition of VMware and its entry into the cloud and virtualization market.

The observatory recently published a new report following an earlier study of Broadcom's abrupt licensing changes. The findings confirmed the ECCO's previous claims: Broadcom continues to impose harsh, unfair contract terms on European infrastructure providers. Many CISPE members reluctantly accepted the terms, forced by the lack of viable alternatives to VMware.

The situation has worsened as Broadcom increasingly uses litigation to pressure its partners and customers into signing new agreements. Recently leaked memos reveal the company is sending cease-and-desist letters to VMware perpetual license holders. These letters reportedly demand payment for continued support or face legal consequences.

Update (May 28): Broadcom reached out to provide a response to this story and shared the following statement: "As a strategic partner with over 140 European Cloud Service Providers, of which more than 40 provide sovereign cloud services, Broadcom is working to advance the European Union's sovereign cloud objectives and enable enterprises of all kinds to accelerate innovation, provide more choice, and address their most complex technology challenges. We welcome the opportunity to have a constructive dialogue with CISPE on how our products can help their European members be more competitive and innovative."

Representatives from CISPE held one meeting with Broadcom, but ECCO reports it yielded no progress. The organization highlights a recent formal complaint submitted by VOICE, a German IT association, to the European Commission. VOICE called for an antitrust investigation and more decisive action against Broadcom's harmful practices, with ECCO lending its support.

The European watchdog group claims Broadcom has done nothing to address complaints from European cloud providers.

"Unlike Microsoft, Broadcom shows no interest in finding solutions or collaborating with European cloud infrastructure providers," CISPE secretary Francisco Mingorance said.

The company can boast about its new contracts and financial results all it wants, but these punitive conditions will ultimately threaten the viability of the locked-in VMware ecosystem.

The ECCO welcomed Brussels authorities' formal antitrust investigation and urged Broadcom to take immediate corrective steps. These include restoring fair business practices, introducing transparent pricing, reopening access to partner programs, and protecting customer privacy. While Broadcom is unlikely to comply, a spokesperson said the company seeks a constructive dialogue with CISPE to support European competitiveness.

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Broadcom could face EU antitrust fines over 'punitive' VMware contract terms

 

[RudyBob]

EU is as bad as China

 

[pnntmp]

What Broadcom is doing is disgusting .. but why the fcking EU just not let the disappointed VMWare customers switch to another platform of their choice?

Why should bureaucrats that have no idea whatsoever what's going on make decisions? Just leave it to the market, will ya? Don't try to regulate what you don't understand, let it regulate itself naturally.
Fukc off, thank you.

 

[Burty117]

There are alternatives to VMware, It'll be a bit painful to migrate, but if Broadcom insists on annoying everyone and everything they touch, it's the only option.

I kind of understand why the EU is getting involved, if you purchased perpetual licenses, but now the company who sold you those licenses are threatening to sue you if you don't start paying a subscription, that sounds more like Broadcom breaking their own terms and conditions to force companies onto a subscription which cannot be legal surely, from memory, it's not like VMware perpetual licenses were cheap, and they were only upgradable within the major version you bought them for (e.g. 6.0 could be upgraded to 6.5/6.7, but you'd need to buy new licenses to upgrade to 7.0).

 

[Puiu]

What Broadcom is doing is disgusting .. but why the fcking EU just not let the disappointed VMWare customers switch to another platform of their choice?

Why should bureaucrats that have no idea whatsoever what's going on make decisions? Just leave it to the market, will ya? Don't try to regulate what you don't understand, let it regulate itself naturally.
Fukc off, thank you.

Because what Broadcom is doing is just pure blackmail. Switching is NEVER a simple process and it can involve the business having to shut down operations for extended periods unless they pay Broadcom.

Anyone calling for "self-regulations" doesn't know wtf is going on right now with VMware and just how bad the situation is.

@RudyBob the US is much closer to China right now. especially in the "workers are slaves" department and the "citizens have no rights, corporations and profits come first" department which is even worse than in China.

 

[RudyBob]

@RudyBob the US is much closer to China right now. especially in the "workers are slaves" department and the "citizens have no rights, corporations and profits come first" department which is even worse than in China.

No and to write so invalidates everything you might say in the future.

 

[Liranan]

It's wonderful how some people come into these threads and poast "Just switch br0!" as if transitioning critical infrastructure is equal to getting a new toaster. Reading the comments here is clearly evidence of a lack of understand, reading comprehension and IQ.

Because what Broadcom is doing is just pure blackmail. Switching is NEVER a simple process and it can involve the business having to shut down operations for extended periods unless they pay Broadcom.

Anyone calling for "self-regulations" doesn't know wtf is going on right now with VMware and just how bad the situation is.

@RudyBob the US is much closer to China right now. especially in the "workers are slaves" department and the "citizens have no rights, corporations and profits come first" department which is even worse than in China.

The only mistake you made in your post is claiming that Chinese people are slaves. Technically we're all debt slaves, even those without debt as we're still beholden to the machinations of criminal banks and corporation. But this is a common mistake that people who live behind the Iron Curtain make as they have no clue how the real world works and are fed endless propaganda by the mainstream liars, not realising that the dystopia they live in is far worse than they can possibly imagine.

 

[pnntmp]

Because what Broadcom is doing is just pure blackmail. Switching is NEVER a simple process and it can involve the business having to shut down operations for extended periods unless they pay Broadcom.

Anyone calling for "self-regulations" doesn't know wtf is going on right now with VMware and just how bad the situation is.

@RudyBob the US is much closer to China right now. especially in the "workers are slaves" department and the "citizens have no rights, corporations and profits come first" department which is even worse than in China.

I completely agree with you that what Broadcom is doing is blackmail and switching is complicated.
The blackmailed companies will have to pay fees to Broadcom until they are ready to switch. They may consider the fees a penalty for not having a backup plan, and for not checking thoroughly the contracts they sign.

Anyway, what Broadcom is doing feels morally wrong, but it may well be legally OK. In such case they'll definitely lose customers, but many may decide the new prices are still cheaper than switching. I guess Broadcom made these calculations and are expecting an overall increased revenue.

 

[Puiu]

It's wonderful how some people come into these threads and poast "Just switch br0!" as if transitioning critical infrastructure is equal to getting a new toaster. Reading the comments here is clearly evidence of a lack of understand, reading comprehension and IQ.


The only mistake you made in your post is claiming that Chinese people are slaves. Technically we're all debt slaves, even those without debt as we're still beholden to the machinations of criminal banks and corporation. But this is a common mistake that people who live behind the Iron Curtain make as they have no clue how the real world works and are fed endless propaganda by the mainstream liars, not realising that the dystopia they live in is far worse than they can possibly imagine.

I don't know if I should make an US credit card and debt joke or not.

 

[Puiu]

No and to write so invalidates everything you might say in the future.

So said the slave from the US. Let us Europeans show you what real freedom is. I know that the truth hurts, but unfortunately you were lied to when people told you that you live the "land of the free".