Broadcom has fired a broadside at AT&T, claiming in court filings that the telecommunications giant’s ongoing lawsuit over VMware licenses is a distraction from its true intent—ditching VMware entirely.
Broadcom closed a deal to purchase VMware for $69 billion in 2023, giving it control of the world’s most ubiquitous virtualization software products. The acquisition immediately sparked concern among VMware customers that Broadcom would aggressively bleed its new holdings for all it was worth—a recent survey of 300 IT decision-makers found around 75% expected VMware costs to at least double. Broadcom’s decision to eliminate perpetual licensing in favor of a subscription model was a particular sore point.
AT&T’s dispute with Broadcom is focused on what obligations, if any, VMware’s new owner has to the owners of those perpetual licenses. In early September, The Register reported that AT&T (which has perpetual licenses) had filed a lawsuit claiming Broadcom refused to honor contract provisions that give it the option to extend support services for another two years. AT&T further claimed Broadcom would only honor the contract if AT&T “agrees to purchase scores of subscription services and software” that it “does not want or need.”
Now Broadcom has responded. In two filings, Broadcom claimed that AT&T “enjoyed heavily discounted pricing from VMware and derived enormous value from the parties’ agreement,” and is now trying to force Broadcom to subsidize its own transition away from VMware.
Broadcom wrote in one memorandum that the AT&T contract has an “unambiguous ‘End of Availability’ provision, which gives VMware the right to retire products and services at any time upon notice.” It further argued that in 2023, AT&T declined to extend the service contract “despite knowing Defendants were implementing a long-planned and well-known business model transition and would soon no longer be selling the Support Services in question.”
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In both that filing and an additional affidavit over the past few weeks, The Register reported, Broadcom said AT&T had stated in writing that not only could it migrate away from Broadcom-owned products whenever it wishes, AT&T intends to do so and expects the move to pay off quickly.
“We have filed this complaint to preserve continuity in the services we provide and protect the interests of our customers,” AT&T Director of Corporate Communications Jim Kimberly told IT Brew in a statement.
Tim Ragones, a managing director with PR firm Joele Frank, shared a statement on behalf of Broadcom stating the company is “confident we will prevail in the legal process.”
“VMware has been moving to a subscription model, the standard for the software industry, for several years—beginning before the acquisition by Broadcom,” the statement continued. “Our focus will continue to be providing our customers choice and flexibility while helping them address their most complex technology challenges.”
As The Register noted, VMware had been planning to move to a subscription model, but Broadcom “accelerated the move massively.” The decision to stop offering owners of perpetual licenses new support contracts—and instead only offer those services to customers who opt into Broadcom subscription bundles—was also a post-acquisition move, The Register wrote.
While the legal drama plays out, VMware customers are sure to be paying attention. Civo, a competing cloud company, recently released a survey that found nearly 52% of VMware customers have tentative plans to jump ship for other virtualization solutions.
“There’s no one I’ve spoken to that is happy about the changes,” Civo CEO Mark Boost told The Register. “The changes benefit [Broadcom], no matter how Broadcom spins it.”