Broadcom’s $61 billion (€52 billion) acquisition of VMware is facing legal scrutiny in an EU court in Luxembourg court after a cloud computing group contested the bloc’s approval of one of the world’s biggest tech deals.
The Cloud Infrastructure Services Providers in Europe, or CISPE, filed a legal complaint at the EU General Court on Thursday, arguing the European Commission failed to impose any conditions to prevent Broadcom abusing its market power.
The group, whose members include Amazon Web Services, said it has “consistently raised alarms” to the EU’s antitrust arm over allegedly harmful Broadcom practices, but that “no substantive action” has been taken to address the concerns.
The deal handed chipmaker Broadcom control over VMware’s “virtualization” software — a core tool used by cloud firms to run multiple systems on a single server. CISPE argues Broadcom has since raised prices and imposed restrictive licensing terms, limiting competition and turning a key tool into a tightly controlled choke-point.
“The dominance of VMware software in the virtualization market means that unfair new licensing terms enforced by Broadcom affect almost every European organization using cloud technology,” said Francisco Mingorance, Secretary General of CISPE. “The commission was warned this would happen, yet it stood by. It must now reconsider its decision.”
The Luxembourg-based EU court will in the near-future stage a hearing into the concerns, and eventually deliver a judgment on whether the commission’s regulators should revisit their approval decision.
Before the transaction was completed in November 2023, it had to clear a gauntlet of regulatory opposition. The EU, UK, South Korea, Japan, China and other jurisdictions all weighed in on the transaction.
The conditions imposed by China were particularly robust, including making sure VMware’s server software was interoperable with Broadcom’s competitors’ hardware.
In December 2023, the EU’s merger regulators approved the buyout, noting that Broadcom offered “a set of comprehensive access and interoperability commitments” that allayed potential antitrust concerns.
But since closure of the deal, fears surfaced over Broadcom’s conduct. Those centered on Broadcom allegedly scrapping existing contracts and adding costly new licensing conditions — steps CISPE allege have hurt European cloud users.