In the wake of Broadcom’s acquisition of VMware, European cloud providers and regulatory bodies are sounding the alarm over what they call “punitive” and “legally flawed” business practices that could undermine competition and harm customers throughout the virtualization ecosystem.
The European Cloud Competition Observatory (ECCO), a watchdog founded by the Cloud Infrastructure Services Providers in Europe (CISPE), recently published a scathing report detailing Broadcom’s conduct following its takeover of VMware. The findings—echoed in parallel reports by TechSpot and Ars Technica—paint a picture of a company leveraging its market power to force cloud providers into costly and coercive subscription models.
Subscription Overreach and Forced Contracts
One of the central criticisms raised in the ECCO report is Broadcom’s transition of VMware’s licensing model from perpetual licenses to mandatory bundled subscriptions. According to ECCO, this shift has imposed “substantial financial burdens and operational disadvantages” on many European cloud infrastructure providers. Many service providers, particularly smaller players, were reportedly pressured into signing these new agreements under duress, facing abrupt terminations of existing contracts and lack of viable alternatives.
The ECCO report suggests that most of the new VMware agreements signed by CISPE members were done so “under significant pressure,” often accompanied by financial incentives such as long-term rebates—effectively making these contracts difficult to refuse.
Legal Intimidation and Antitrust Complaints
Perhaps more troubling is Broadcom’s increasingly litigious posture. Reports have emerged of cease-and-desist letters targeting perpetual VMware license holders, with demands for payments or threats of legal action. In one high-profile case, Broadcom filed a lawsuit against Siemens for allegedly deploying thousands of unlicensed copies of VMware software.
This aggressive enforcement strategy has raised fears among cloud service providers of becoming legal targets themselves. As a result, the German IT advocacy group VOICE has filed a formal antitrust complaint with the European Commission, accusing Broadcom of anticompetitive bundling practices and arbitrary price hikes that obstruct competition.
Regulatory Calls and Possible EU Fines
The growing concern has prompted calls for immediate regulatory intervention. ECCO’s recommendations include reinstating legacy licensing terms, pausing ongoing litigation related to the new subscription terms, and implementing transparent notice policies—such as six months’ advance warning before contractual or pricing changes take effect.
Should Broadcom continue on its current course, EU regulators could impose substantial antitrust fines, potentially curtailing Broadcom’s aggressive monetization strategy. While Broadcom has indicated its willingness to engage in “constructive dialogue” with European stakeholders, CISPE’s leadership remains skeptical.
Francisco Mingorance, secretary general of CISPE, emphasized the urgency: “Broadcom is unlikely to make any voluntary changes. On the contrary, we fear it may further tighten conditions.”
Cloud Providers at a Crossroads
The broader virtualization ecosystem now faces a pivotal moment. While some customers have already begun transitioning away from VMware to competing platforms, many—especially small to medium-sized businesses—remain locked into the VMware stack with no viable alternatives yet available.
As ECCO and VOICE escalate their pressure campaigns and regulators weigh formal enforcement, the future of VMware’s licensing model may well hinge on whether Broadcom modifies its current trajectory—or forces Europe to act decisively.
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