The European tech scene is abuzz following legal action taken by a cloud service provider (CSP) association against Broadcom. The organization has filed an antitrust complaint with the European Commission, challenging Broadcom's decision to shut down VMware's partner program, a move that has raised significant concern among small and medium-sized businesses in the sector.
The VMware Partner Program Controversy
Since acquiring VMware, Broadcom has pursued a strategy of drastically reducing the number of partners VMware collaborates with. This process began with the elimination of the previous partner program, replaced by an invitation-only alternative that openly favors larger, enterprise-focused partners. The result is a significant decrease in CSPs working with VMware, with increasingly stringent requirements. Broadcom has introduced an operational requirement of at least 3,500 cores, rendering hundreds of CSPs ineligible for partnership. Before the acquisition, VMware boasted over 4,000 CSP partners, a number that has now drastically shrunk, with around 19 partners in the United States and only nine in the United Kingdom according to recent reports.
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The European Commission's Intervention
The complaint, filed by the CISPE association, aims to secure immediate intervention from the European Commission. The goal is to stop Broadcom from completely eliminating the program, which still allows transactions until March 31. CISPE is urging the imposition of an interim measure that would force Broadcom to reopen the CSP program, reinstate excluded partners, and prevent any form of retaliation against them. Broadcom's unilateral decision to terminate the program in Europe in January 2026 has effectively excluded most European CSPs from selling VMware products, leaving room only for a select few chosen partners.
Allegations of Abuse and Price Hikes
Beyond closing the program, CISPE accuses Broadcom of "continued abuse" of its market positions. Among the contested practices are staggering price increases, with some customers reporting hikes of up to 900 percent, along with product bundling strategies and commitment requirements based on forecasted rather than actual usage. CISPE's Secretary General, Francisco Mingorance, called these increases "outrageous and unjustified," emphasizing the need for urgent intervention to reverse course. This situation recalls dynamics already observed in the tech sector, such as massive AI investments leading to new business strategies, or operating system evolutions influencing the hardware market. Consider also how Microsoft revised its AI strategies in Windows, demonstrating how large companies adapt their offerings.
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Broadcom's Response
Broadcom has firmly rejected the allegations, calling them a distortion of market reality. In a statement, the company reiterated its commitment to investing in VMware's European Cloud Service Provider partners, with the goal of helping them offer alternatives to so-called hyperscalers and meet the evolving needs of European businesses. However, CISPE, which has 50 members and includes giants like Amazon Web Services and Microsoft among its adherents (though without voting rights in certain activities), already filed an appeal with the EU General Court last July to annul the approval of Broadcom's acquisition of VMware. That case is still ongoing, highlighting the complexity of antitrust dynamics in the tech sector.
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Implications for the Cloud Market
The case raises important questions about the future of competition in the cloud services market and the protection of small and medium-sized enterprises. The concentration of power in the hands of a few large players could limit innovation and increase costs for end users. The European Commission's decision will be crucial in defining the future regulatory framework and ensuring a fairer, more competitive market. This case fits into a broader context of debate on regulating large tech companies, a theme that also involves aspects like cybersecurity and data ethics, as shown by discussions on the FBI's collection of location data.
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Our publication thinks that...
Broadcom's move, while understandable from a post-acquisition consolidation strategy standpoint, risks stifling competition and penalizing a partner ecosystem that contributed to VMware's growth. The European Commission faces a delicate task in balancing the commercial interests of a large company with the need to preserve a healthy and diversified market. Excluding hundreds of small and medium-sized businesses from the VMware products market could have significant repercussions, limiting the options available to many European companies and potentially increasing costs. It is crucial that regulators intervene to ensure strategic acquisitions do not result in monopolies harmful to innovation and competitiveness.
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