A trade association that represents cloud providers in the European Union has filed suit over Broadcom Inc.’s acquisition of VMware.
The group, CISPE, disclosed the move today. It submitted the complaint to the European General Court, the EU’s second highest court. The lawsuit seeks to annul the EU antitrust approval that allowed Broadcom to close the acquisition.
Broadcom, a major provider of chips and enterprise software, announced its plans to buy VMware in May 2022. The $61 billion deal only closed 18 months later as a result of regulatory approval delays. The EU and the U.K.’s competition watchdog investigated the acquisition over concerns it may harm rivals.
The European Commission raised antitrust concerns about the transaction before approving it. To alleviate those concerns, Broadcom made commitments designed to protect market competition. CISPE’s new lawsuit charges that those commitments weren’t adequate to prevent Broadcom from abusing its market position.
VMware develops vSphere, the industry’s most popular hypervisor. It also sells a range of other software tools designed to help companies manage their infrastructure. According to CISPE, Broadcom scrapped some customers’ VMware software contracts after the acquisition closed and went on to apply “onerous new licensing conditions.”
In some cases, the company allegedly raised software prices. CISPE claims that some organizations experienced a more than tenfold increase in the cost of using VMware products. Furthermore, the group charges that Broadcom made access to some VMware software contingent on users signing multi-year commitments.
CISPE says Broadcom rolled out additional licensing restrictions earlier this month. According to the group, the changes mean that smaller cloud providers “could now be barred from purchasing and reselling VMware-based cloud services.”
“The dominance of VMware software in the virtualisation market means that unfair new licensing terms enforced by Broadcom affect almost every European organisation using cloud technology,” said CISPE Secretary General Francisco Mingorance.
The virtualization market was a focus of the EU antitrust probe that preceded the acquisition. Officials scrutinized the compatibility of VMware’s software with FC HBA chips, which are used to connect servers with storage equipment. The EU was concerned that Broadcom, which makes such chips, could end VMware’s support for competitors’ FC HBA products.
The EU approved the deal after Broadcom pledged to continue supporting rival products. Furthermore, the company committed to open-sourcing its own FC HBA chips’ drivers.
Broadcom is not the only tech giant to have faced antitrust scrutiny from CISPE. In 2022, the group filed a competition complaint against Microsoft Corp. over its software licensing terms. CISPE ended the lawsuit last year after reaching an agreement with the company that secured more favored licensing terms for its members.
Photo: Broadcom
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