The Cloud Infrastructure Service Providers in Europe (CISPE) consortium has appealed to regulatory and legislative authorities throughout Europe to examine Broadcom’s modifications to VMware’s operational model, which they claim will “decimate” the region’s cloud infrastructure. “

CISPE implores regulators, legislators, and courts across Europe to promptly investigate Broadcom’s actions in unilaterally terminating license terms for crucial virtualisation software,” the trade body stated.

Since its acquisition of VMware in November 2023, Broadcom has initiated a thorough revamp of software licensing at the company, eliciting widespread disapproval from clients.

 Broadcom has announced it will maintain support for customers under a perpetual licensing agreement for the duration specified in the contract, but thereafter, customers will be required to convert any remaining licenses to subscription-based offerings.

This situation has left both cloud service vendors and customers in a state of uncertainty, with CISPE citing a lack of concrete information on how, when, or if they can license VMware products indispensable for their operations from April 2024. Furthermore, even if they manage to relicense VMware software, numerous customers have reported significant price increases, up to 12-fold.

CISPE’s depiction of the situation is markedly critical, contending that Broadcom is exploiting VMware’s market dominance—nearly 45 per cent of the virtualisation market—to impose exorbitant fees on cloud providers. Several CISPE members have confessed that without the capability to license VMware products, they will be unable to continue operations and face insolvency, with some indicating that over 75 per cent of their revenue relies on VMware virtualisation technology. Members have also reported receiving termination notices belatedly, if at all, with exceedingly brief notice periods.

 CISPE has voiced objections to the decision to withdraw numerous products without prior notification and to repackage the remaining products under new, restrictive contract terms, despite no changes to the products themselves.

CISPE’s secretary-general Francisco Mingorance said that these alterations will harm European customers and cloud service providers by escalating costs and limiting options.

“As our members transition to accommodate the switching and portability requirements between cloud services stipulated in the Data Act, Broadcom is effectively extorting the sector by capitalising on VMware’s dominance in the virtualisation market to impose inequitable license terms and extract excessive fees from European cloud clients,” Mingorance said.

CISPE has highlighted that for certain cloud sector applications necessitating certifications from software or service providers, VMware products represent the sole feasible choice. Consequently, the association has called for Broadcom to be designated as a gatekeeper under the Digital Markets Act (DMA), which was enacted on March 7, 2024.

Mingorance has cautioned that Broadcom’s strategies will only further constrict the already limited alternatives available to cloud providers in Europe, alerting that Broadcom possesses a perilous level of influence over the region’s digital ecosystems.

“In addition to inflicting economic harm on the European digital economy, these measures will devastate Europe’s independent cloud infrastructure sector and further diminish the diversity of options available to consumers,” he said. “Dominant software providers, regardless of the sector—from productivity software to virtualisation—should not be permitted to exercise such pivotal control over Europe’s digital ecosystems.”