The European Union approved Broadcom’s $69 billion acquisition of cloud computing and virtualisation software company VMware in December 2023; however, it may reverse that decision. Cloud Infrastructure Services Providers in Europe (CISPE) has appealed the decision, arguing that it overlooked serious competition risks.
What is CISPE asserting in its appeal?
The alliance of cloud providers, which includes Amazon Web Services, filed a legal complaint with the EU’s General Court on July 24. It asserted that, while the EU acknowledged that the deal posed risks to competition at the time of approval, it failed to impose any safeguards to prevent it from gaining — and potentially abusing — excessive market dominance.
“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,” Francisco Mingorance, Secretary General of CISPE, said in a statement.
“Not just cloud service providers, but hospitals, universities, and municipal authorities are all now facing unaffordable bills and rigid long-term commitments that jeopardise the flexibility and affordability of their cloud infrastructure.”
CISPE alleges that since the acquisition, Broadcom has abruptly terminated existing VMware contracts, sometimes with just weeks’ notice, and implemented new licensing terms featuring up to tenfold cost increases and mandatory multi-year commitments.
Just this month, Broadcom converted VMware’s partner program to invitation-only, effectively cutting off smaller cloud providers by terminating their contracts and eliminating the resale model that allowed them to offer VMware-based services through larger partners.
CISPE argues that failures in the European Commission’s competition assessment, as well as “errors in law,” are significant enough to justify revoking the deal’s approval. Over the last two years, prior to making this drastic step, the group “consistently” raised its concerns with the European Commission and attempted to engage with Broadcom to negotiate fairer terms, but no action was taken by either party.
Broadcom’s response
A Broadcom company spokesperson told TechRepublic: “Broadcom strongly disagrees with these allegations. The European Commission, along with twelve other jurisdictions around the world, approved our acquisition of VMware following a thorough merger review process, and we will uphold the commitments made to the Commission at that time.
“We continue to bring our customers better choices and solutions to address their most complex technology challenges.”
The next step is for the General Court to hold a hearing and ultimately decide whether the Commission must revoke its approval of the deal.
VMware’s acquisition has always been controversial, despite its approval
Chipmaker Broadcom’s acquisition of VMware in November 2023 remains one of the largest tech deals in history. At the time, some analysts expressed concerns that it could lead to price hikes, diminished support, and stunted innovation — outcomes observed in Broadcom’s previous takeovers of CA Technologies and Symantec.
In addition to the EU, the deal required regulatory approval from the UK, South Korea, Japan, China, and several other jurisdictions. China insisted that Broadcom make VMware’s server software compatible with its competitors’ hardware, while the EU took a more lenient approach, stating it was satisfied with Broadcom’s commitments to open-source its host-adapter code and support interoperability for third-party hardware makers.
Notably, none of the EU’s requirements for Broadcom addressed VMware’s growing dominance in the virtualisation software market. Conversely, in the hardware segment — where the EU did intervene — there remain several viable competitors, such as Nutanix, Microsoft, and Citrix.
Focusing its complaint on Broadcom’s control of the virtualisation software market may be a strategic move by CISPE, suggesting that its intent is not solely to overturn the Commission’s approval, but to push regulators to act against what it describes as abusive licensing practices.
With the AI race heating up, the first half of 2025 has been peppered with acquisitions of cloud infrastructure companies, chip manufacturers, and agent platforms.
