Euro cloud group blasts Broadcom over VMware licensing maneuvers

CISPE says concessions 'solve nothing'

Updated Euro cloud trade body CISPE has hit back at concessions offered by Broadcom over VMware licensing, saying these do not address key issues that led it to lobby the European Commission into investigating.

CISPE, or Cloud Infrastructure Services Providers in Europe, claimed that Broadcom is trying to "obfuscate the main issues in this dispute" by framing its licensing changes as pro-competition and pro-innovation, and ignoring concerns about price hikes and tying products together.

Earlier this month, Broadcom announced changes to mollify VMware customers after EU antitrust regulators started making inquiries about its licensing practices in response to complaints from CISPE and other European business users.

Those changes amounted to support extensions for customers that need more time to consider the change to subscription licensing, and providing some ongoing security patches for customers who decide to stick with their perpetual licenses.

CISPE says in a blog post that the subscription license model has never been the problem, but that "massive and unjustifiable" hikes in prices now threaten the economic viability of cloud services used by many customers in Europe. It also claims that the bundling of products, altered basis of billing, and the imposition of unfair software licensing terms ultimately restrict choice and lock-in customers and partners.

The Register has previously reported that some VMware customers have seen their bills rise by 500 or 600 percent, or license costs increase from $8 million to $100 million, as a consequence of the changes Broadcom ushered in after its takeover of the virtualization giant completed last November.

Yet CISPE goes further and states that Broadcom's subscription models are actually anti-cloud as they force cloud provider partners to commit and pay in advance for capacity that they may never use, instead of offering flexible pay-as-you-go models that help customers and providers scale resources to demand.

The partner program for Cloud Services Providers (CSPs), for example, requires them to commit to licensing a minimum of 3,500 cores, which one service provider told us would amount to about $800,000 per year, with a minimum three-year contract term.

CISPE also poured scorn on the offer to continue zero-day patch support for existing perpetual license customers, saying this is "insulting in its limitations." Broadcom is effectively saying there will be no support other than to fix critical vulnerabilities, unless customers move to the new subscription license, and CISPE claimed this "verges on racketeering."

We asked Broadcom for its response to these complaints.

Mark Boost, CEO of UK-based cloud firm Civo and a critic of Broadcom's post-merger VMware strategy, states that CISPE is absolutely right to reject Broadcom's changes.

"Broadcom's acquisition was initially sold as a signpost for the future of cloud computing. But for most companies, this has not been the case, with vast increases in licensing costs and uncertainty when facing future updates and developments," Boost said in a statement.

There is growing concern that Broadcom's decisions will stifle innovation and harm cloud competition, he added.

CISPE claims that dominant software firms increasingly feel unconstrained in their use of unfair software licensing practices to distort markets in their favor, and say that formal investigations are needed now.

"We have seen it with Microsoft and now Broadcom. The ability for dominant software providers to unilaterally 'pick winners' by deciding who can and who cannot licence their software is a clear form of discrimination," it says, adding that it urged the European Commission and other regulators to act now to "halt this tide of abuse that is damaging Europe's shift to the cloud and digital growth." ®

Updated at 1356 UTC on April 24, 2024, to add

A spokesperson at Broadcom sent us a statement:

Broadcom remains committed to providing value for all our customers and partners. Broadcom and VMware’s robust solutions are creating more choice and enabling enterprises of all kinds to accelerate innovation and address their most complex technology challenges. Our simplified offering at a significantly reduced price responds to customer feedback, and is focused on facilitating seamless workload management. We welcome ongoing customer and partner dialogue and collaboration to ensure that our efforts remain aligned with their expectations and objectives.

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