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Broadcom questioned by EU over VMware licensing changes
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Broadcom questioned by EU over VMware licensing changes
Apr 15, 2024 7:09 AM

BRUSSELS, April 15 (Reuters) - U.S. chipmaker Broadcom ( AVGO )

is being asked by EU antitrust regulators about changes

to newly acquired cloud computing company VMware's licensing

conditions following complaints from a spate of EU business

users and a trade group.

The EU competition enforcer said it had sent requests for

information to Broadcom ( AVGO ) to investigate the issue.

"The (European) Commission has received information

suggesting that Broadcom ( AVGO ) is changing the conditions of VMware's

software licensing and support," a spokesperson said on Monday.

Beltug, a Belgian association of business users, and its

counterparts France's Cigref, CIO platform Nederland and VOICE

Germany last month took their grievances to EU antitrust chief

Margrethe Vestager, EU industry chief Thierry Breton and

Commission President Ursula von der Leyen.

The groups in a joint letter complained about sudden changes

by Broadcom ( AVGO ) in policy and practices which allegedly resulted in

steep price increases, re-bundling of licences, a ban on the

reselling of licences, and a refusal to maintain security

conditions for perpetual licences.

Trade body CISPE, whose members include Amazon ( AMZN ) and

26 small EU cloud providers, has also complained about Broadcom ( AVGO )

allegedly unilaterally cancelling license terms for essential

virtualisation software.

Some of VMware's changes were already in the pipeline even

before its acquisition by Broadcom ( AVGO ), a person with direct

knowledge of the matter told Reuters.

Broadcom ( AVGO ) on Monday announced changes for VMware customers in

a bid to fend off the criticism.

"We have dramatically reduced the price of VCF (VMware Cloud

Foundation) to promote customer adoption," Broadcom ( AVGO ) CEO Hock Tan

said in a blogpost.

"VCF includes all compute, storage, networking, management,

and support capabilities that deliver consistent infrastructure

and operations across clouds, and comes at half the list price

compared to past pricing," he said.

He said Broadcom ( AVGO ) was standardizing the metric for its

pricing across cloud providers to per-core licensing, and will

remove technical barriers to customers moving from on-prem to

cloud, switching their workloads from one cloud provider to

another, or back to on-premise data centers.

On-prem refers to software installed and run on computers on

the premises of companies, versus software installed at a remote

facility such as a server farm or cloud.

VMware will complete its move to a subscription model that

provides access to the most recent version plus support for a

fixed term, a process that started in 2018, but this will not

affect customers' ability to use their existing perpetual

licences, Hock Tan said.

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