It costs how much now?
Cloud Infrastructure Services Providers in Europe (CISPE) members told the European Cloud Competition Observatory (ECCO) that prices have increased “tenfold,” ranging from 800% to 1,500%, since VMware was acquired by Broadcom in 2023.
ECCO, in its most recent report on Broadcom from May, issued a critical status to the company’s “ongoing unfair software licensing practices.” In an appendix to the report, ECCO said that after the acquisition, the company “unilaterally modified the licensing terms of essential VMware software, leading to an exponential increase in prices for users.”
“The majority of CISPE members have entered into new licensing agreements with Broadcom,” ECCO stated. “However, these agreements were often signed under significant pressure, influenced by a lack [of] alternatives, abrupt contract terminations, and financial incentives such as rebates for longer-term commitments.”
Money, money, money. ECCO pointed to “unjustified increases in licensing costs” for European businesses that include hospitals and public services. The report shared that, within the United States, AT&T reported a price hike of 1,050%.
Almost all CISPE members were compelled to accept Broadcom’s new licensing terms due to the extremely short notice given to them and the “essential nature” of the software. Due to these financial impacts of the cost hikes from Broadcom, ECCO reported that some CISPE members have had to “massively restructure” their infrastructures and purchase new equipment.
“The only CISPE member that fully and successfully exited VMware’s software environment did so because the nature of its servers…allowed for an alternative and because the price hikes created a life-threatening situation,” ECCO wrote.
It continued: “They invested several months of software development involving all 400 employees of the company and were able to implement an open-source solution adapted for their use case after significant hardware and software development efforts.”
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ECCO said that this isn’t feasible for other companies, which it said Broadcom from its “detailed knowledge of the workloads used by each of its customers.”
The report states: “The current VMware licensing model appears to rely on practices that breach [European Union] competition regulations which, in addition to imposing harm on its customers and the European cloud exosystem, creates a material risk for the company and their shareholders should regulators investigate and challenge the legality of such model.”
Objection! This report followed ECCO’s February release that handed another critical status to Broadcom’s licensing practices. It stated that CISPE had been campaigning for the company to reconsider the changes to license agreements for essential VMware virtualization software used by CISPE members and other cloud customers across Europe.
Some customers have gone against Broadcom in national commercial courts. But, ECCO reported, “In most cases, neither CISPE members nor other affected parties have dared to go to litigation for fear of reprisals.”
“We have heard, although do not yet have concrete evidence, that Broadcom’s pressure on customers is not restricted to its VMware software licenses but extends to other Broadcom software including mainframe software upon which customers are reliant,” ECCO’s February report stated.
In the May report, ECCO said that Broadcom has “instigated a highly litigious approach to partners and customers,” citing cease-and-desist letters sent to permanent license holders and a legal suit filed against Siemens in the US, as reported by The Register.