EU Advocacy Group Urges EU Court to Reconsider Broadcom's Acquisition of VMware
Cloud Infrastructure Services Providers in Europe (CISPE) has filed an appeal with the European General Court, challenging the European Commission's approval of Broadcom's acquisition of VMWare. The alliance claims that the Commission made errors in law and manifest failures in properly assessing competition risks, ultimately allowing Broadcom excessive market dominance without imposing necessary conditions to prevent anti-competitive abuse.
The crux of CISPE's concerns revolves around Broadcom's unilateral changes to VMware’s licensing terms after the acquisition closed. These changes have led to drastic cost increases, sometimes more than tenfold, and mandatory multi-year licensing commitments that reduce flexibility. Furthermore, existing contracts have been terminated with only weeks' notice.
CISPE asserts that these new licensing terms are unfair and exclusionary, significantly raising costs and reducing access for smaller European cloud providers, as well as for important public sector users like hospitals and universities. Despite CISPE's repeated warnings and extensive engagement with the European Commission and Broadcom over the past two years, they claim no substantive action was taken to protect European cloud providers or their customers.
As a result, CISPE is seeking an annulment of the Commission’s approval. The alliance argues that the European Commission did not impose any conditions on Broadcom to limit its market dominance, which threatens competitive cloud service provision across Europe.
Broadcom, however, disputes these allegations and maintains that the acquisition was thoroughly reviewed and approved by multiple global competition authorities. A Broadcom spokesperson stated that the company strongly disagrees with the allegations and will uphold the commitments made to the European Commission during the approval process.
The European Commission, along with around ten other competition authorities, gave final approval to the acquisition in May. No date has been set for a court hearing regarding CISPE's appeal. In the meantime, hospitals, universities, and municipal authorities are now facing unaffordable bills and rigid long-term commitments due to Broadcom's new licensing terms, according to CISPE.
[1] CISPE Press Release: CISPE Files Appeal Against European Commission's Approval of Broadcom's Acquisition of VMWare (link) [2] European Commission Press Release: European Commission Approves Broadcom's Acquisition of VMWare (link) [3] CISPE Whitepaper: The Impact of Broadcom's Acquisition of VMWare on European Cloud Providers and Customers (link) [4] Microsoft Press Release: CISPE Wins Dispute Over Microsoft's Software Licensing Practices (link) [5] Broadcom Press Release: Broadcom Disputes Allegations Regarding VMWare Acquisition (link)
- CISPE asserts that the European Commission's failure to impose conditions on Broadcom during the acquisition of VMWare, despite the potential anti-competitive risks and subsequent unfavorable changes to licensing terms, threatens the infrastructure and financial sustainability of European cloud providers and crucial public sector users like hospitals and universities.
- Amidst concerns over cybersecurity, technology, and business competition, CISPE's appeal highlights the need for rigorous assessment and regulation of mergers and acquisitions in the cloud infrastructure sector, ensuring fair licensing terms and preserving market diversity in Europe.
