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European cloud group criticized Broadcom for changes to VMware license terms

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European cloud group criticized Broadcom for changes to VMware license terms

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Analysts have previously warned that Broadcom’s acquisition and subsequent changes to VMware’s licensing structure could affect end users.

The trade group Cloud Infrastructure Services Providers in Europe (CISPE) has asked European regulators, legislators and courts to investigate Broadcom’s move to “unilaterally remove license terms for core virtualization software”. This is related to Broadcom’s push to revise VMware’s perpetual license agreements with third-party resellers and enterprise customers.

The group says Broadcom’s move will affect the viability of some of its members, which rely on the licensing and use of VMware products.

“Several CISPE members have stated that without the ability to license and use VMware products, they will soon go bankrupt and go out of business,” CISPE noted in a statement. “Some claim that more than 75% of their revenue depends on VMware’s software virtualization technologies. End users – from large national companies, public sector services to SMEs and start-ups – have reported that they will not be able to use their online services to provide some or all of it if this licensing issue is not resolved. In some cases, these include essential medical services.”

The group explained that VMware had nearly 45% of the virtualization market last year, which puts Broadcom in a position to dictate contract terms, product availability and which third-party vendors – with the devices or services they make. together – can offer these services.

“Hundreds of products have been removed without notice, and those that remain have been repackaged with new terms and conditions, without any technical modifications or software improvements, in a way that unfairly increases costs for customers,” CISPE added. “Furthermore, resellers do not know if they will even be invited to participate in Broadcom’s new partner programs. Those who are invited feel pressured to accept unfair license terms by short deadlines for signing up. The new terms are a minimum of tens of millions of euros for three-year periods they contain commitments. The costs of the licenses have in some cases increased by 12 times (i.e. 1200%).”

CISPE wants regulators to order an immediate pause on contract terminations and allow Broadcom’s VMware customers to exit multi-year contracts with Broadcom “as soon as viable alternatives become available.”

Analysts warned of Broadcom’s moves

Analysts have warned that Broadcom’s acquisition and subsequent changes to VMware’s licensing structure could affect end users.

“These partners are clamoring,” Forrester Research senior analyst Tracy Woo told SDxCentral in an interview earlier this year. “They’re angry because they’re a reseller partner and they didn’t get any advance notice, just that day, and it was just an email. It’s very Broadcom-style: blunt and not polite.”

Woo said the move, however, has raised concerns among end users who have traditionally used VMware products and services through these partner channels and are now deeply tied to the VMware ecosystem.

“I just talked to a customer who wasn’t really affected by the new affiliate program because he’s using a reseller who was accepted into the new program, but he’s very concerned about what’s just happened,” Woo said. “Due to the changes, he had to prepare a new business plan, strong arguments to convince their managers why they should replace VMware, and a list of possible alternatives must be compiled in a flash.”

Late last week, Broadcom continued its transformation of VMware licensing by unveiling its new partnership strategy for the VMware Cloud Foundation (VCF) platform. This is based on Broadcom’s Advantage Partner Program, which was launched at the beginning of last month.

Broadcom CEO Hock Tan hinted in a recent blog post that there were challenges in the first 100 days after the acquisition, but said they will be beneficial in the long run. “Of course, we recognize that this level of change has understandably caused some uneasiness among our customers and partners,” Tan wrote. We also expect that these changes will provide greater profitability and better market opportunities for our partners.”

The European Commission approved it last year

The European Commission (EC) approved Broadcom’s acquisition of VMware last summer after a “thorough investigation” that resulted in Broadcom making concessions.

The investigation primarily dealt with the fact that the deal “damages competition a [Fiber Channel Host Bus Adapterek] offering in the global market”, especially considering that Broadcom “could eliminate Marvell’s only significant competitor in the field of FC HBAs from the market by limiting or degrading the interoperability between VMware’s server virtualization software and Marvell’s hardware”.
In response, Broadcom offered to guarantee access to its APIs and technical support for the development and certification of third-party FC HBAs, including access to the source code of all current and future Broadcom FC HBA drivers through an open source license; interoperability with VMware server virtualization software; and provides access to this information to third parties at the same time as Broadcom.

VMware’s licensing issue was also an area of ​​investigation, and it was initially feared that “Broadcom may begin bundling VMware’s virtualization software with its own software (namely, mainframe and security software) and no longer offer VMware’s virtualization software as a standalone product, reducing choice and potentially excluding rival software providers”.

However, in approving the deal, the EC ultimately concluded that “Broadcom would not be able to bundle VMware’s virtualization software with its own software (namely, mainframe and security software) because these products are manufactured by different customer departments and/or at different times.” are bought”.

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