Digital Event Horizon
A new report by the European Cloud Competition Observatory (ECCO) has accused VMware's business model under its parent company Broadcom of being "legally and ethically flawed." The report highlights concerns regarding subscription-based pricing, litigious practices, and regulatory compliance, urging regulators to take action to address these issues. As small businesses struggle to adapt to the new licensing terms, ECCO's findings serve as a call for greater transparency and more equitable software practices in the industry.
VMware's business model under Broadcom has been accused of being "legally and ethically flawed" by the European Cloud Competition Observatory (ECCO). ECCO claims that customers who switched to subscriptions face substantial financial burdens and operational disadvantages. Broadcom is accused of having a highly litigious approach to partners and customers, which has created an environment where CSPs fear becoming targets in legal pursuits. ECCO calls for changes such as guaranteeing at least six months' notice prior to contractual changes and reassessing incentives and requirements for VMware's partner program. Many VMware customers, especially small to medium-sized businesses, are finding alternative solutions or researching ways to reduce their dependence on VMware due to punitive licensing terms. Regulatory action is needed to address Broadcom's business practices, with VOICE already filing a complaint with the European Commission accusing Broadcom of antitrust violations.
In a scathing report released today, the European Cloud Competition Observatory (ECCO) has accused VMware's business model under its parent company Broadcom of being "legally and ethically flawed." The report, which was written in collaboration with members of the Cloud Infrastructure Services Providers in Europe (CISPE) trade association, outlines numerous concerns regarding Broadcom's approach to software licensing practices, partner relationships, and regulatory compliance.
According to ECCO, VMware customers who have transitioned to subscriptions are facing "substantial financial burdens and operational disadvantages." The report argues that this shift to subscription-based pricing has created a material risk for the company and its shareholders, particularly if regulators were to investigate and challenge the legality of such a model.
The report also expresses concerns about Broadcom's "highly litigious approach to partners and customers," citing cease-and-desist letters sent to VMware perpetual license holders and recent litigation with Siemens. ECCO believes that these actions have created an environment where CSP partners fear becoming targets in Broadcom's legal pursuits, which is further exacerbating the difficulties faced by small to medium-sized businesses.
ECCO calls for several key changes to be implemented by Broadcom, including guaranteeing at least six months' notice prior to any changes to contractual terms, pricing structures, or conditions applicable to renewals. The report also demands that Broadcom reassess its partner program, including "reassessing incentives, requirements, and tiering structures," in order to ensure a more equitable relationship between the company and its partners.
Broadcom has responded to ECCO's allegations by emphasizing its commitment to working with CSPs and advancing the European Union's sovereign cloud objectives. The company has welcomed the opportunity for constructive dialogue with CISPE on how its products can help European members become more competitive and innovative.
However, given Broadcom's financial success since acquiring VMware, it appears unlikely that the company will make voluntary changes to its business model. Francisco Mingorance, secretary general of CISPE, stated that while most CISPE members have entered new licensing agreements with VMware, these agreements were often signed under significant pressure, influenced by a lack of alternatives, abrupt contract terminations, and financial incentives.
ECCO's report comes as many VMware customers, especially small to medium-sized businesses, are finding alternative solutions to virtualization platforms or researching ways to reduce their dependence on VMware. Despite efforts by CISPE members to adapt to the new licensing terms, "most have signed new contracts, but we know that these are punitive and threaten the viability of service providers locked-in to the VMware ecosystem," Mingorance noted.
The situation highlights the need for regulatory action to address Broadcom's business practices. VOICE, a German IT customer association, has already filed a complaint with the European Commission accusing Broadcom of antitrust violations due to its allegedly unfair pricing practices and abuse of dominant market position.
In conclusion, ECCO's report serves as a wake-up call for regulators, policymakers, and the industry at large to scrutinize Broadcom's business model under VMware. The report's findings underscore the urgent need for more equitable software licensing practices, robust regulatory oversight, and greater transparency in partner relationships.
Related Information:
https://www.digitaleventhorizon.com/articles/The-Legally-and-Ethically-Flawed-Business-Model-of-VMware-Under-Broadcom-A-Report-by-the-European-Cloud-Competition-Observatory-deh.shtml
https://arstechnica.com/information-technology/2025/05/vmware-cloud-partners-demand-firm-regulatory-action-on-broadcom/
Published: Thu May 22 13:50:23 2025 by llama3.2 3B Q4_K_M
