Cloud Group Pans Broadcom’s Effort to Placate EU Regulators

EU trade group calls Broadcom's response to price hike criticisms and probe "insult to injury."

Shane Snider , Senior Writer, InformationWeek

April 22, 2024

2 Min Read
Homepage of Broadcom website on the display of PC
Mykhailo Polenok via Alamy Stock

A trade group representing cloud companies in the European Union on Monday said chipmaker Broadcom’s changes to its cloud software licensing practice -- coming after the EU announced an antitrust probe -- do not go far enough to address problems, saying “brutal” price hikes threaten cloud service providers.

Cloud Infrastructure Services Providers in Europe (CISPE), a trade group whose members include Amazon and 26 small EU cloud providers, says the company’s recent moves to placate EU regulators did little to address price gouging allegations.

EU antitrust regulators on April 15 announced a probe into the company’s changes to newly acquired cloud software company VMware that impacted licensing and support terms. Several complaints emerged in the EU centered on Broadcom’s policy changes they say caused a significant price hike, along with other complaints. Broadcom completed its $61 billion VMware acquisition in July 2023.

Broadcom CEO Hock Tan addressed the concerns on the company’s blog, announcing price cuts and saying the changes would be a positive for customers. “We have dramatically reduced the price of VCF (VMware Cloud Foundation) to promote customer adoption,” he wrote.

Broadcom’s proposed changes and Tan’s framing of the company’s subscription policy as pro-competition and pro-innovation did little to allay concerns from CISPE. “The subscription license model has never been the problem; indeed, CISPE members and their customers are already using it. What threatens the economic viability of many cloud services used by customers in Europe are the massive and unjustifiable hikes in prices, the re-bundling of products, altered basis of billing, and the imposition of unfair software licensing terms that restrict choice and lock-in customers and partners.”

Related:Broadcom Sells Remote Computing Business in $4B Deal with KKR

Belgium’s Betlug, Frances Cigref, CIO platform Nederland, and VOICE Germany also launched complaints against Broadcom’s licensing policies. The groups took their concerns to EU antitrust chief Margrethe Vestager, Thierry Breton, EU’s industry chief, and European Commission President Ursula von der Leyen.

In Tan’s blog post, he said Broadcom was changing “how we engage with cloud service providers … the core principle for our new engagement with cloud providers is that end customers should have complete freedom to move their workloads from their own data centers to cloud providers, and between cloud providers.”

Tan also said the company would standardize its pricing across cloud providers, make it easier to move from on-premises to cloud, and other enhancements for providers of VCF.

Related:What the $61B Broadcom-VMware Deal May Mean to the Cloud Sector

CISPE, however, calls the changes “minor,” and encourages the European Commission to continue its formal investigation.

“It is clear to us that this blog from Broadcom was in response to the timely and prices intervention of the European Commission … However, the response from Broadcom is insulting, unsatisfactory and has only increased the anger among our members,” Francisco Mingorance, CISPE’s secretary general, said in a statement. “What is needed is a concerted action by regulators to enforce, through formal investigations, a return to fair licensing principles across the software market.”

InformationWeek has reached out to Broadcom for comment and will update with response.

About the Author(s)

Shane Snider

Senior Writer, InformationWeek, InformationWeek

Shane Snider is a veteran journalist with more than 20 years of industry experience. He started his career as a general assignment reporter and has covered government, business, education, technology and much more. He was a reporter for the Triangle Business Journal, Raleigh News and Observer and most recently a tech reporter for CRN. He was also a top wedding photographer for many years, traveling across the country and around the world. He lives in Raleigh with his wife and two children.

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