The Cloud Infrastructure Service Providers in Europe (CISPE) has filed a legal action aimed at overturning the European Commission’s decision that allowed Broadcom to acquire VMware. According to CISPE spokesperson Ben Maynard, the appeal argues that the Commission inadequately assessed the licensing solutions proposed by Broadcom, thereby underestimating the potential negative impacts of the acquisition on European cloud infrastructure providers and their clients. CISPE claims that this clearance would reinforce VMware’s position as a licensing gatekeeper, hindering competition and innovation in the European cloud market.
In their announcement, CISPE highlighted that since the acquisition was finalized in July 2023, Broadcom has terminated existing contracts abruptly, often with minimal notice, and implemented new, onerous licensing terms. These changes have resulted in significant cost increases—sometimes more than tenfold—and imposed mandatory multi-year agreements for accessing essential VMware software.
CISPE has accused Broadcom of introducing new restrictive licensing terms that could prevent smaller cloud providers, including many of its members, from purchasing and reselling VMware-based cloud services. Maynard noted that appeals like this typically take 18 to 24 months to resolve, although more complex cases can extend up to three years. During this period, the Commission’s original approval stands; however, it would be annulled if CISPE prevails.
Broadcom has firmly rejected the accusations, asserting that the European Commission, along with 12 other global jurisdictions, sanctioned the VMware acquisition following a comprehensive merger review. They emphasized their commitment to adhering to agreements made with the Commission and noted that they aim to provide enhanced solutions for their customers’ technology challenges.
Dario Maisto, a Senior Analyst at Forrester Research, commented that many European organizations have been adversely affected by recent changes in Broadcom VMware’s commercial practices, which have included unilateral price hikes and service closures. He pointed out that European entities are often reliant on IT vendors that operate in monopolistic or oligopolistic conditions, suggesting that legislative efforts like the proposed Buy European Act might be necessary for promoting better competition in the region’s cloud market.
John Annand from Info-Tech Research Group expressed mixed feelings about Broadcom’s tactics, indicating that while Broadcom’s actions ultimately serve their interests, they significantly disadvantage their partners and customers. Following the acquisition, Annand mentioned that Broadcom has eliminated preferential pricing arrangements for cloud provider partners, impacting many small CISPE members.
Despite the negative ramifications for European clients not complying with Broadcom’s new licensing conditions, Annand noted that there are still sovereign cloud options available from Microsoft and other providers. He acknowledged that while VMware may still have a substantial footprint, alternatives for virtualization are abundant and increasingly viable.
The call for a new direction in partnerships is echoed by Annand, emphasizing the opportunity for European companies to migrate to alternatives like Proxmox and others, as VMware’s previous value proposition diminishes in light of recent changes.
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