The EU is considering opening a monopoly investigation into Broadcom for establishing alleged restrictions on VMware software licenses. For now, regulatory authorities in the region are carefully examining new evidence of abuse of dominance in their possession in relation to this issue.
According to Bloomberg, regulators in charge of ensuring competitiveness and preventing monopolistic practices in the EU have asked European cloud companies that would be affected by the alleged irregularities caused by changes in Broadcom’s licenses after it bought VMware in 2023 to present evidence of any irreparable damage they have suffered as a result.
This measure is usually the predecessor to the opening of a formal monopoly investigation, and if it is opened, if its conclusions indicate that Broadcom has engaged in monopolistic practices, they may face a fine that would reach up to 10% of their global income. However, if you resolve the concerns and problems of the companies that have denounced your attitude and practices to the EU, you can avoid opening the investigation.
A spokesperson for the European Commission has assured that they have received a complaint about the distribution of VMware products by Broadcom, and that its members are actively following the evolution of the situation in relation to the changes recently made to the Broadcom partner program, whose management has not commented on the matter.
This increased surveillance of Broadcom’s activity in the EU comes after several changes to the licensing of VMware products after purchasing the company. The acquisition agreement gave Broadcom control over VMware’s virtualization software, a very popular tool among different cloud companies for running different systems on the same server.
Already in April 2024, the European Commission said it had begun exploring the market to gather information on the changes implemented by Broadcom since the purchase. And this recent request for examples of evidence leads the Brussels regulatory body to decide to delve deeper into a case in which the complaining companies are asking for quick intervention by the authorities.
One of the complainants is the European Cloud Commerce Association, Cispewhich considers it necessary for EU regulators to take interim measures to stop Broadcom’s termination of VMware software licenses after its announcement in 2024. In addition, Cispe is also challenging in court the approval of the VMware purchase that the European Commission issued in December 2023, alleging that it did not do enough to ensure that the harm that whistleblowers claim to have occurred would be avoided.
