Broadcom questioned by EU over VMware licensing changes

A smartphone with a displayed Broadcom logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/ File photo

BRUSSELS (Reuters) - U.S. chipmaker Broadcom 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 to investigate the issue.

"The (European) Commission has received information suggesting that Broadcom 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 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 and 26 small EU cloud providers, has also complained about Broadcom 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, a person with direct knowledge of the matter told Reuters.

Broadcom 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 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 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.

(Reporting by Foo Yun Chee; Editing by Jan Harvey)

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