Company accused of abusing a monopoly

A new report concludes that Broadcom’s price rises are leaving European customers without viable VMware alternatives.

European cloud providers and enterprise IT customers are sounding alarms over changes to VMware’s licensing structure that have driven prices up by as much as 1,500% since Broadcom’s acquisition of the virtualisation giant.

A new report by the European Cloud Competition Observatory (ECCO) says Broadcom’s “punitive” pricing strategy and restrictive new terms are leaving European customers with no viable alternatives and threatening the viability of many cloud service providers (CSPs).

The report, jointly issued with CISPE, a trade body representing 37 European cloud infrastructure firms, accuses Broadcom of exploiting its dominant market position.

It points to the sudden elimination of perpetual licensing and monthly pay-as-you-go models in favour of rigid, long-term subscription bundles with a minimum three-year commitment.

“Prices have often increased tenfold,” the report claims, citing CISPE member data and a high-profile example from AT&T, which reported a projected 1,050% increase in its VMware support bill last year before entering settlement talks with Broadcom.

ECCO also confirms that pricing complaints sent to the European Commission cited increases ranging from 800% to 1,500%.

According to ECCO, several cloud providers were convinced to sign new contracts under duress. Broadcom allegedly terminated existing licensing agreements, some in place for over a decade, “unilaterally and without sufficient notice.”

In exchange for locking into long-term commitments, customers were offered limited rebates of 30-50%, though these discounts did little to offset the sharp baseline increases.

Francisco Mingorance, Secretary General of CISPE, said Broadcom “shows no interest in finding solutions” or working with European providers.

“Broadcom can report that 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. Urgent action is needed,” he added.

In response, Broadcom told us, “As a strategic partner with over 140 European Cloud Service Providers, of which more than 40 provide sovereign cloud services, Broadcom is working to advance the European Union’s sovereign cloud objectives and enable enterprises of all kinds to accelerate innovation, provide more choice, and address their most complex technology challenges.

“We welcome the opportunity to have a constructive dialogue with CISPE on how our products can help their European members be more competitive and innovative.”

Price rises are only the start of the controversy

The ECCO report outlines further grievances, including Broadcom’s dismantling of VMware’s existing partner programme for CSPs.

Only the largest players were invited into Broadcom’s replacement programme, a move seen as marginalising smaller providers and hindering competition. Additionally, partners are now forced to choose between being a service provider or a reseller, a restriction ECCO says ignores the hybrid service realities of many European firms.

In another controversial move, Broadcom reportedly issued cease-and-desist letters to perpetual license holders who applied post-support patches. It also launched a lawsuit against Siemens in the USA, demonstrating what ECCO calls a “highly litigious approach.”

ECCO outlines several recommendations to restore fair competition and sustainable licensing practices, including:

  • A minimum six-month notice period before any changes to contract terms or pricing;
  • Usage-based pricing models that reflect actual capacity needs;
  • Flexible licensing options allowing for volume reductions;
  • The right for CSPs to simultaneously act as resellers and service providers.

The organisation argues these changes are essential for European cloud sovereignty and innovation, claiming that current practices have already damaged both.

In a statement to The Register, a Broadcom spokesperson defended the company’s actions, claiming it is committed to helping European cloud providers compete and innovate.

“We welcome the opportunity to have a constructive dialogue with CISPE on how our products can help their European members be more competitive and innovative,” the spokesperson said.

Mark Boost, CEO of UK cloud provider Civo, said:

“A 1,500% price rise tells you everything you need to know about who controls the cloud market.

“What we’re seeing from Broadcom is the fallout of unchecked consolidation. Longstanding VMware customers have been backed into a corner – contracts torn up with little warning, flexible options withdrawn, and new terms loaded with risk and cost. The shift to rigid, bundled subscriptions with multi-year lock-ins leaves little room for operational flexibility. It forces businesses to absorb more cost and complexity, making it harder to adapt, invest, or scale on their own terms.

“We’ve spoken to 1,000 users through our own research. Nearly half said they now pay more to get the same capabilities they had before the VMware acquisition. That kind of pricing pressure is what kills innovation. When providers are forced to absorb these costs or pass them on, the space to invest in better services shrinks fast.

“The bigger issue here is what this means for cloud competition in Europe. These licensing tactics risk undermining the ability of alternative providers to compete, and by extension, the ability of organisations to make sovereign choices about their infrastructure.”