CISPE is filing a complaint and asking the European Commission to impose interim measures regarding Broadcom, which has terminated its Cloud Service Provider program, unilaterally undermining the business models of many organizations.
CISPE has filed a complaint with the European Commission’s Directorate-General. In it, the trade association for European cloud providers formally accuses Broadcom of abuse and unfair competition practices.
From thousands to dozens
The complaint is a direct response to Broadcom’s decision to unilaterally terminate its VMware Cloud Service Provider (VCSP) program. This happened earlier this year in Europe. In the US, Broadcom has already shed its VMware partners: of the thousands of providers, only nineteen remain.
VCSPs are long-standing VMware partners that distribute the company’s solutions to their customers. Providers were already struggling when Broadcom hiked prices and overhauled the offering immediately after the VMware acquisition, causing attractive consumption models for VMware software to disappear for all but the world’s largest companies. The end of the VCSP program is the final blow for many partners.
Companies that have earned their living for years by selling VMware solutions to their customers are no longer allowed to do so. Broadcom is hand-picking a few larger partners to continue bringing the offering to market. Other players are expected to simply pass their own customers on to these chosen parties.
Fewer players, less choice
CISPE sees numerous issues with the termination of the VCSP program. Cloud providers are being aggressively forced out of the market by Broadcom in favor of a handful of players. Meanwhile, end customers are seeing their choice of partners evaporate completely. In essence, Broadcom is seizing even more control over the market based on its dominant position.
The trade association hopes the European Commission will impose interim measures before it is too late. Following the official closure of the VCSP program, providers have until March 31 to finalize their last customer agreements. After that, they will no longer be able to sell VMware solutions. In theory, the Commission could order Broadcom not to phase out the program immediately.
Lack of measures
Whether the complaint will have any effect in the short term remains to be seen. Although it is difficult to justify Broadcom’s anti-competitive behavior—with products being bundled in artificial ways, prices increasing by as much as tenfold for many European organizations, threatening letters being sent, and upfront payments being demanded—the EU has so far taken no action.
CISPE has another pending complaint with the EU in hopes of overturning the acquisition’s approval, based on the aforementioned (partially predicted) market disadvantages. However, it seems highly unlikely that the clock can be turned back in any significant way.
No way back
The reality will likely be that VCSPs have to pivot. The new pricing strategy is pushing end customers toward VMware alternatives in large numbers. Partners are also needed for the migration to and management of these alternatives. For all parties involved, Broadcom’s behavior is a major setback.
Other parties are trying to attract customers looking for alternatives en masse. Nutanix is the most obvious alternative. The company offers a lot of similar functionality and also has well-developed migration options. Other products and solutions, including Proxmox, are rapidly professionalizing to meet demand from the enterprise market.