Euro-cloud consortium CISPE calls for investigation of Broadcom

Claims members will be bankrupted by new VMware licensing regime, and vital services disrupted

Lobby group CISPE – a collective representing Cloud Infrastructure Providers in Europe – has called for regulators to investigate VMware by Broadcom's software licensing arrangements, which it claims will bankrupt some of its members and hurt end-users.

The group on Tuesday objected to what it described as Broadcom "unilaterally cancelling license terms for essential virtualization software."

"Cloud customers, including public sector bodies, large European businesses, SMEs and start-ups are all threatened by egregious and unwarranted new contract terms and price increases," the group thundered, before calling for "at minimum, an immediate pause to contract terminations and the ability of customers to exit the multi-year contract imposed by Broadcom as soon as viable alternatives become available."

That's a reference to Broadcom sweeping away VMware's partner program and replacing it with its own, and a requirement for those who offer VMware products as-a-service to have at least 3,500 cores in production to qualify for a license. Those licenses cover multiple years. Broadcom will stop selling licenses to smaller clouds later this month, leaving them unable to offer VMware-as-a-service and probably necessitating a sudden and unasked-for migration for their clients.

As The Register reported on Tuesday, few VMware-powered cloud operators operate 3,500 cores, and therefore most face a very uncertain future. Broadcom appears to have thrown those operators a lifeline with an arrangement that will designate small clouds not admitted to Broadcom's channel program as "Secondary" providers who can purchase licenses from "Primary" providers that meet the 3,500-core requirement.

However an organization familiar with that arrangement told The Register it has not gone down well, because Primary partners will have to support VMware software for Secondary partners. Primary partners are set up to host multiple tenants, so handling Secondary partners would not be a massive complication – but Primary partners seldom if ever provide software support at the same level as a vendor. The Primary/Secondary scheme has therefore attracted criticism, as some feel it is not a viable arrangement for Secondary partners.

CISPE reports those invited to become Primary partners are also unhappy.

"Those that are invited feel pressured into accepting unfair licensing terms by the short deadlines imposed to sign," the lobby group wrote, adding "New terms include minimum commitments amounting to tens of millions of Euros over three-year periods. Costs for licenses have increased by a factor of twelve (ie 1,200 per cent) in some cases."

Secondary partners, CISPE argues, may go out of business.

"Several CISPE members have stated that without the ability to license and use VMware products they will quickly go bankrupt and out of business," the org alleges, adding that some of the complainants derived over 75 percent of their revenues from VMware software.

Clients of those at-risk CISPE members include providers of "vital medical services."

"Citizens will be deprived of everyday, cost-effective cloud services and Europe's digital ambitions will be severely damaged," the org added.

CISPE secretary general Francisco Mingorance contended that Broadcom "is holding the sector to ransom by leveraging VMware's dominance of the virtualization sector to enforce unfair license terms and extract unfair rents from European cloud customers."

He called for Broadcom to be designated as a gatekeeper under Europe's Digital Markets Act – status that would earn it the closest regulation the EU has to offer.

"CISPE calls on regulators to swiftly examine Broadcom's actions and call it to account," he added.

CISPE has recently agitated for changes to Microsoft's software licensing practices that make its wares cheaper when run in Redmond's own Azure cloud, and more expensive when hosted by CISPE members. Microsoft made some concessions on that front as required by European law – but CISPE feels more needs to be done to create a level playing field, and rejected Redmond's proposed fix.

Broadcom has insisted its new VMware licensing regime won't change, and has form as being untroubled by the loss of smaller customers.

However, in the current situation it risks upsetting some of its larger customers – Primary partners – by not making it easy for them to onboard Secondary partners.

The Register can't see evidence that regulators have heeded CISPE's call. Perhaps they will once a few small VMware-powered clouds are forced to require sudden and disruptive migrations to rival platforms. ®

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