A European cloud provider renewed its VMware contract this year and opened a bill that was roughly eight times what it had paid the year before. Some customers report increases of 800 to 1,500 percent. Those figures now sit at the center of a fresh round of questions from European Union antitrust officials, who have gone back to cloud firms to ask again how Broadcom has changed the way it sells VMware software.
Broadcom closed its purchase of VMware in November 2023 for about $69 billion and moved quickly to reshape the business. The company ended the sale of perpetual licenses, the model under which a customer pays once and uses the software indefinitely. In its place Broadcom pushed buyers into bundled subscriptions that require recurring payments. The result, according to the cloud providers, was a price shock that shows up in renewal bills rather than in any public announcement.
The questions coming out of Brussels are not the first. The European Commission has been gathering information on the licensing overhaul for months. In March, the Cloud Infrastructure Services Providers in Europe, a trade group known as CISPE, filed a formal antitrust complaint accusing Broadcom of abusing a dominant position. The complaint argued that the shift to subscriptions left customers with little room to negotiate and few alternatives to move to.
Broadcom has pushed back at each step. The company asked the EU’s General Court to suspend the Commission’s requests for information, arguing that the demands were excessive. The court rejected that request in April, clearing the way for officials to keep collecting documents and answers.
The change goes beyond pricing. Broadcom has also cut the number of partners allowed to sell VMware cloud solutions. A network that once numbered more than 4,000 providers worldwide has been reduced, according to people familiar with the matter, to 19 companies in the United States and nine in the United Kingdom. A smaller channel means fewer resellers and, cloud providers argue, less competitive pressure on prices.
So far the Commission has not imposed interim measures. As of September, officials were still collecting evidence rather than ordering Broadcom to change course. That restraint matters, because interim measures are the tool regulators can use to halt conduct while an investigation runs. Their absence suggests the case is still in a fact-gathering phase.
The dispute is part of a broader fight over how much power a small group of software and chip companies holds over enterprise computing. VMware’s virtualization software runs inside data centers across Europe. Cloud providers built their services on it and found themselves tied to a supplier that, after the Broadcom deal, changed the terms of the relationship almost overnight. Customers told regulators they could not easily switch, because rebuilding a data center around a rival product takes years and costs millions.
Broadcom’s argument has been consistent. The company says the subscription model cleans up a product catalog that had grown tangled, and that most customers end up getting more value for what they pay. It points to its spending on the product line as evidence that it is not simply extracting revenue from an installed base. Analysts said the company has little incentive to retreat, given that VMware contributes a meaningful share of Broadcom’s software revenue.
The stakes run in both directions. For Broadcom, a forced reversal on licensing would dent a revenue stream it paid tens of billions of dollars to acquire. For European regulators, the case tests how far competition law reaches when the conduct is a pricing and packaging decision rather than a classic refusal to deal.
What happens next depends on how the Commission reads the evidence it is now gathering. A formal statement of objections would lay out the regulator’s theory and open a process that could stretch for years. The two sides could also reach commitments under which Broadcom agrees to change some practices without admitting fault. Neither path has been signaled publicly.
The acquisition itself cleared European review in 2023 only after Broadcom agreed to conditions meant to protect rival hardware makers. Those conditions addressed interoperability with competing chips, not the software licensing that has since drawn the complaints. Broadcom’s chief executive, Hock Tan, has said the subscription shift was necessary to simplify a sprawling product line and fund development, and he has shown little appetite for reversing course.
For the cloud providers that first sounded the alarm, the second round of questions is a sign that their complaints have not been shelved. The same renewal bills that stung them eightfold are now part of a case file in Brussels. Whether that file turns into enforcement is the question Broadcom’s customers, and its investors, will be watching.
Broadcom completed the VMware acquisition only after winning approval in multiple jurisdictions, and the licensing changes began almost immediately afterward, according to customers. The speed of the shift caught partners off guard, cloud providers said, leaving them little time to renegotiate contracts or test alternatives before the higher prices took effect.
