The interest group CISPE is taking the European Court to challenge the approval of Broadcom’s acquisition of VMware. The organization aims to have the decision annulled.
The European cloud infrastructure providers’ association CISPE has filed a formal appeal with the European Court against the approval of Broadcom’s acquisition of VMware.
According to CISPE, the European Commission made legal errors in assessing the acquisition. In the published decision, the Commission acknowledges that the acquisition poses market risks. However, it failed to impose appropriate conditions to prevent market distortions. CISPE argues that these errors are serious enough to warrant the annulment of the decision.
The acquisition of VMware by Broadcom was approved by the EU in 2023. In May of this year, the Commission published the summary of that decision. Based on this, CISPE is now taking the matter to court.
Disadvantage to Customers and Partners
Since the acquisition, Broadcom has unilaterally terminated existing contracts and imposed new licensing terms. Significant price increases, mandatory bundling of previously separately sold services, and mandatory multi-year agreements for access to VMware software are particularly detrimental to customers.
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CISPE Challenges EU Court’s Approval of Broadcom’s Acquisition of VMware
Many European companies and institutions rely on VMware and are now seeing their costs skyrocket. Given the position of the VMware suite in the infrastructure layer, a quick migration to an alternative is not easy. In practice, Broadcom holds VMware customers hostage: they generally have no alternative but to pay in the short term.
This month, Broadcom imposed further restrictions that could exclude small cloud providers, including many CISPE members, from using and reselling VMware services. CISPE fears this will consolidate the market around a limited number of large providers and undermine customer choice. European resellers also see their service model collapse without much warning. The decision is also painful for their end customers.
No Action from the Commission
The organization had already raised its concerns about Broadcom’s licensing practices with the European Commission. Despite several meetings and extensive information exchange, the Commission, according to CISPE, took no action to protect the European cloud sector.
The Commission saw that the acquisition of VMware by Broadcom would be risky, and since it came into effect, all prior concerns have proven valid. Yet the EU does not act. Therefore, CISPE is now going to court. The goal is to have the current approval annulled.