EU Cloud Providers Sue Commission Over Broadcom-VMware Deal, Allege Unfair Competition

The Cloud Infrastructure Services Providers in Europe (CISPE), an industry alliance representing European sovereign cloud infrastructure providers, has filed a legal complaint with the General Court of the European Union, accusing the European Commission of failing to impose safeguards to prevent Broadcom from abusing its market dominance following its acquisition of VMware—an act CISPE claims has resulted in unfair competition.

In 2022, Broadcom announced its intention to acquire virtualization and cloud infrastructure provider VMware in a $61 billion deal. The European Commission subsequently launched an antitrust investigation, yet ultimately approved the acquisition with certain conditions.

At the time, Broadcom pledged to maintain interoperability. However, in practice, it has allegedly leveraged its dominant market position to implement numerous changes that impose increasingly onerous and unfair terms on cloud infrastructure providers. According to CISPE, Broadcom has shown little interest in cooperating with European cloud providers.

CISPE was originally formed during the campaign—backed by Google and Amazon—to prompt the EU to investigate Microsoft Azure for antitrust practices. That initiative led to a settlement between Microsoft and CISPE, resulting in Microsoft relaxing some of its cloud licensing restrictions within the EU.

Similarly, CISPE had previously warned the Commission about potential anticompetitive risks stemming from Broadcom’s acquisition of VMware. Since the deal’s closure, Broadcom is said to have introduced new pricing models that coerce customers into bundled subscriptions, with prices reportedly increasing more than tenfold.

In light of these developments, CISPE has initiated legal proceedings against the European Commission, urging it to reopen its review of the Broadcom-VMware merger. The Secretary General of CISPE stated, “Given VMware’s dominant role in the virtualization market, Broadcom’s enforcement of unfair new licensing terms will inevitably affect nearly every organization in Europe that relies on cloud technology.”

Responding to the lawsuit, Broadcom issued a statement affirming, “Our acquisition of VMware was approved following extensive merger reviews by the European Union and twelve other global jurisdictions. We remain committed to honoring the commitments we made to the European Commission.”

While the European Commission in Brussels declined to comment, a hearing will soon be held by the European Court of Justice in Luxembourg, which will ultimately decide whether the Commission must reconsider its approval of the Broadcom-VMware transaction.

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