A £100M Lawsuit: Tesco Sues Broadcom Over VMware License Dispute

British and Irish retail giant Tesco has filed a lawsuit against Broadcom and its distributor, alleging breach of licensing agreements and seeking up to £100 million in damages.

In January 2021, Tesco purchased perpetual licenses for VMware vSphere Foundation and VMware Cloud Foundation through reseller Computacenter, then an authorized VMware distributor.

The licenses included support and upgrade services valid until 2026, with an option to extend for an additional four years—up to 2030.

However, following Broadcom’s acquisition of VMware, the semiconductor manufacturer ended support for perpetual licenses, shifting instead to a subscription-based model designed to maximize profitability. Tesco claims this new pricing structure forces the company to pay substantially more for virtualization software it has already licensed.

Within Tesco’s infrastructure, VMware software underpins approximately 40,000 servers that support store checkout systems and other critical operations. The retailer argues that the withdrawal of support and upgrades could result in service disruptions across its network.

Switching to alternative virtualization platforms would entail significant costs and risks, potentially causing widespread disruption. As a result, Tesco has chosen to pursue legal action to compel Broadcom to honor its original perpetual license agreement and continue providing support and upgrades.

Tesco is not the first company to challenge Broadcom in court. Numerous firms—particularly in the cloud sector—have already taken legal action, contending that Broadcom’s licensing and service practices impose additional costs on customers who previously secured perpetual licenses.

Under Broadcom’s current licensing rules, holders of perpetual licenses are prohibited from installing VMware updates, which are now reserved exclusively for subscription customers. This forces enterprises into a dilemma: forego critical updates and risk security vulnerabilities, or migrate to Broadcom’s subscription model. Critics argue this strategy effectively coerces businesses into abandoning perpetual licenses in favor of costly subscriptions.

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