Critics dismiss Broadcom’s ‘anti-cloud’ licencing changes for VMware

Critics dismiss Broadcom’s ‘anti-cloud’ licencing changes for VMware

The CISPE, whose members include Amazon and 26 small EU cloud providers, have taken strong exception to Broadcom's portrayal of the situation

Published on 23rd April 2024

Broadcom’s efforts to allay concerns over its recent changes to VMware’s cloud licencing practices have hit a roadblock.

Critics, including the Cloud Infrastructure Services Providers Europe (CISPE) trade group, are rejecting the adjustments, arguing they fail to address core issues like price hikes and restrictive licencing terms.

Last week, Broadcom CEO Hock Tan attempted to reassure customers and investors with a blog post defending the company’s licencing practices.

Broadcom announced price cuts and increased flexibility for moving workloads between cloud environments, but CISPE has taken strong exception to Broadcom’s portrayal of the situation.

The trade body, whose members include Amazon and 26 small EU cloud providers, says Broadcom’s changes are inadequate and fail to tackle the main issues.

According to CISPE, the subscription model itself is not the problem. “Our members already use subscription licencing,” the trade body stated in a press release. The true issues, it says, lie in “massive price hikes,” product bundling changes and unfair licencing terms that limit customer choice and lock them into Broadcom’s ecosystem.

The core of CISPE’s criticism centres on Broadcom’s new subscription terms, which they argue are “anti-cloud.” The trade body argues these terms force customers to prepay for virtual machine capacity they may not even need, unlike the traditional pay-as-you-go model common in cloud services.

“This is like being forced to pay, in advance, for a fleet of taxis that you may, or may not, use in the next 3 years!” the statement reads.

CISPE further criticises Broadcom’s software licencing practices, arguing they undermine the core value proposition of cloud services – on-demand access to resources. They view the offer of continued security patches for existing perpetual licence holders as “insulting,” essentially forcing customers to subscribe for basic security updates.

Finally, CISPE takes aim at Broadcom’s claims of lower prices and customer engagement. They assert that, in their experience, prices have skyrocketed by up to 12 times.

CISPE welcomed the intervention of the European Commission on the issue and urges a formal investigation into Broadcom’s practices.

“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,” CISPE said.

“We urge the European Commission and other powerful regulators to act now to halt this tide of abuse that is damaging Europe’s shift to the cloud and digital growth. Formal investigations are needed now.”

Last week, a European Commission spokesperson confirmed that the antitrust regulator had requested information from Broadcom following complaints from trade groups and businesses.

“The Commission has received information suggesting that Broadcom is changing the conditions of VMware’s software licencing and support,” the spokesperson added.

Meanwhile, Broadcom maintains its changes provide more options for customers.

“Our simplified offering at a significantly reduced price responds to customer feedback, and is focused on facilitating seamless workload management,” the company said.

Henri d’Agrain, general manager of French trade body CIGREF, expressed frustration with Broadcom’s approach, stating they are now “tired of Broadcom dictating what we need and what is good for us.”

He pointed out that despite Broadcom’s claims of lower prices, there has been a notable increase in licencing costs for VMware’s core software without justification.

“We urge the Commission to take action, to act swiftly, with a political vision, and not to leave this matter solely to the discretion of competition law technicians, as it falls outside their purview,” d’Agrain added.


The latest updates straight to your inbox

We just need a few details to get you subscribed

Health Checks

Inventory & Compliance

Cloud Readiness & Optimisation

Agreement & Audit Support


Looking for something specific?

Let's see what we can find - just type in what you're after

Wait! Before you go

Have you signed up to our newsletter yet?

It’s chock full of useful advice, exclusive events and interesting articles. Don’t miss out!

Cookie Notice

Our website uses cookies to ensure you have the best experience while you're here.