CISPE: Broadcom’s ‘Brutal’ VMware Tactics ‘Will Decimate Europe’s Cloud Infrastructure’

Broadcom is drawing harsh condemnation from CISPE, the European cloud organization, is calling out Broadcom for “brutal” tactics in regard to VMware licensing.

Broadcom purchased VMware, the leader in virtualization technology, sparking a great deal of concern among customers and industry experts alike. It appears those concerns were well-founded, with CISPE accusing Broadcom of ‘unilaterally canceling all licenses for VMware software’ and charging up to 12x when inviting customers to relicense VMware.

The organization is calling on regulators to intervene, citing the irreparable harm that Broadcom will cause to the European cloud sector.

Cloud customers, including public sector bodies, large European businesses, SMEs and start-ups are all threatened by egregious and unwarranted new contract terms and price increases. CISPE is calling for, at minimum, an immediate pause to contract terminations and the ability of customers to exit the multi-year contract imposed by Broadcom as soon as viable alternatives become available.

Several CISPE members have stated that without the ability to license and use VMware products they will quickly go bankrupt and out of business. Some state that over 75% of their revenues depend on VMware software virtualisation technologies. End customers, ranging from large national champions and public sector services to SMEs and start-ups, report that they will not be able to deliver some or all of their online services if this licensing issue is not resolved. In some cases, these include vital medical services. Ultimately, citizens will be deprived of everyday, cost-effective cloud services and Europe’s digital ambitions will be severely damaged.

CISPE goes on to say that termination notices were delivered late, if at all, giving companies little time to meet Broadcom’s demands.

“At a time when our members are moving to support the requirements for switching and portability between cloud services outlined in the Data Act, Broadcom is holding the sector to ransom by leveraging VMware’s dominance of the virtualisation sector to enforce unfair licence terms and extract unfair rents from European cloud customers,” commented Francisco Mingorance, secretary general of CISPE. “These changes harm European customers and cloud service providers, increasing costs and reducing choice.”

CISPE emphasizes that VMware holds nearly 45% of the virtualization market share as of 2023, making it one of the only options for many companies in the cloud industry. As a result, Broadcom’s tactics could “decimate” Europe’s tech industry.

“As well as inflicting financial damage on the European digital economy, these actions will decimate Europe’s independent cloud infrastructure sector and further reduce the diversity of choice for customers. Dominant software providers, in any sector from productivity software to virtualisation, must not be allowed to wield life or death power over Europe’s digital ecosystems,” Mingorance added.

Broadcom has a reputation for being ruthless in pursing profits, but it appears it’s tactics may backfire in the EU.