EU antitrust regulators investigate Broadcom over VMware licensing changes

US chipmaker Broadcom is under scrutiny from EU antitrust regulators regarding alleged alterations to the licensing conditions of recently acquired cloud computing company VMware. This comes in response to complaints lodged by several EU business users and a trade group.

The European Commission has initiated an inquiry into Broadcom's actions, prompted by reports of changes to VMware's software licensing and support terms. According to a Commission spokesperson, concerns have been raised about Broadcom's purported modifications, including significant price hikes, changes in license bundling, restrictions on license resale, and withdrawal of security commitments for perpetual licences.

Beltug, representing Belgian business users, along with counterparts from France, the Netherlands, and Germany, have jointly expressed their grievances to EU antitrust chief Margrethe Vestager, EU industry chief Thierry Breton, and Commission President Ursula von der Leyen. Similarly, trade body CISPE, counting Amazon and 26 small EU cloud providers among its members, has raised concerns over Broadcom's unilateral cancellation of essential virtualisation software license terms.

It has been disclosed by a source familiar with the matter that some of VMware's policy adjustments were already underway before Broadcom's acquisition.

In response to the mounting criticism, Broadcom CEO Hock Tan has announced measures aimed at addressing customer concerns. Tan stated in a blog post that Broadcom has significantly slashed the price of VMware Cloud Foundation (VCF) to encourage adoption, offering a comprehensive solution covering computing, storage, networking, management, and support at a reduced rate compared to previous pricing.

Furthermore, Broadcom intends to standardise its pricing metric across cloud providers to per-core licensing and eliminate technical barriers hindering customers' transitions between on-premises and cloud environments, or across different cloud service providers.

Regarding VMware's transition to a subscription-based model, which commenced in 2018, Tan assured that existing perpetual license holders will not be affected, as they will retain the ability to use their licenses as before.

(With Reuters inputs)