Challenging Broadcom's $61 billion acquisition of VMWare in court, a group of European cloud providers assert legal action.
European Cloud Providers Challenge Broadcom's Acquisition of VMware
In a significant move, the Cloud Infrastructure Services Providers in Europe (CISPE) has formally filed a legal appeal before the European General Court, challenging the European Commission’s approval of Broadcom's acquisition of VMware. The appeal aims to annul the Commission’s May 2025 decision, arguing that the Commission made errors in law and manifest failures in its competitive assessment.
The main reasons behind CISPE's appeal include the European Commission's failure to impose conditions to prevent Broadcom from potentially gaining a dominant market position and abusing it. Since the acquisition's conclusion, Broadcom has taken several actions detrimental to competition and smaller providers.
Unilaterally terminating existing VMware contracts with very short notice, imposing onerous new licensing terms with drastic cost increases, and enforcing long-term commitments on VMware software licensing are among the practices that have raised concerns. Furthermore, license terms that may explicitly exclude smaller cloud providers limit their ability to purchase or resell VMware-based services crucial for flexible European cloud solutions.
CISPE has been raising these issues with the European Commission's Directorate-General for Competition (DG Competition) for over two years, but received no effective intervention despite the warnings.
The potential impacts on VMware's partners and customers are significant. Smaller and sovereign European cloud providers could be excluded from accessing VMware products or face prohibitive costs, undermining their competitiveness and ability to deliver cloud services. Existing customers and partners may experience abrupt contract terminations, much higher costs, and restrictive licensing commitments, which could disrupt service delivery and cloud infrastructure operations.
This situation could reduce market competition, reinforce Broadcom's dominant position, and limit interoperability and fair access to VMware technologies in European cloud markets.
In summary, CISPE seeks to reverse the European Commission’s approval due to unaddressed anticompetitive risks and the practical negative consequences that have followed Broadcom's acquisition of VMware. Their legal challenge emphasizes protecting smaller cloud providers and preserving competitive, flexible cloud infrastructure options for European customers.
Meanwhile, many in the VMware ecosystem are upset and/or confused by Broadcom's licensing and channel changes. VMware prevents some perpetual license holders from downloading patches, and Broadcom recently axed the lowest tier of its channel program everywhere except Europe. Telefónica Germany, for instance, has offloaded VMware support to Spinnaker due to high renewal costs.
Broadcom strongly disagrees with these allegations and will uphold the commitments made to the Commission during the acquisition approval process. Arista, on the other hand, has acquired VMware's VeloCloud SD-WAN outfit from Broadcom.
For VMware users seeking alternatives, choices abound, including Nutanix, Microsoft, HPE, Red Hat, Citrix, and new contenders like Platform9, Arcfra, and OpenNebula. Only Nutanix targets service providers of the sort that become CISPE members.
The European Commission's ruling that Broadcom could acquire VMware had little to do with virtualization software, a field in which Virtzilla is the most mature vendor but faces plenty of competition. The EC's decision will likely be closely watched as it navigates future technology acquisitions to ensure fair competition and the protection of smaller providers.
[1] CISPE Press Release: CISPE Challenges the European Commission’s Approval of Broadcom’s Acquisition of VMware [2] TechCrunch: CISPE Files Legal Appeal Against European Commission's Approval of Broadcom's Acquisition of VMware [3] ZDNet: CISPE Appeals European Commission's Approval of Broadcom's Acquisition of VMware [4] The Register: CISPE Files Legal Challenge Against European Commission's Approval of Broadcom's Acquisition of VMware
- The Cloud Infrastructure Services Providers in Europe (CISPE) have raised concerns about Broadcom's AI-driven technology approach, claiming that potential changes could limit the ability of smaller cloud providers to purchase or resell crucial software like VMware-based services.
- In response to the controversy surrounding Broadcom's strategies, many VMware users have started exploring alternatives, such as Nutanix, Microsoft, HPE, Red Hat, Citrix, Platform9, Arcfra, and OpenNebula, with only Nutanix specifically targeting service providers that could become CISPE members.
- As a result of the legal challenge by CISPE, the European Commission will have an opportunity to review its decision and reconsider the potential impact on competition, hardware, and software ecosystems, as well as the role of AI in shaping the future of cloud technologies.
