Cloud Companies Reject Broadcom VMware Pricing Changes


Cloud companies, business user groups say Broadcom price changes do not address their concerns, as European Commission investigates

Cloud providers and business users have said Broadcom’s changes to its cloud licensing practices do not address their concerns over changes to its cloud pricing brought in after the firm acquired VMware last year.

Trade group CISPE, whose members include Amazon and 26 small EU cloud providers, along with Cigref, a French association of business users, and Austrian cloud service provider Anexia said changes proffered last week left in place issues that they believe may cause many smaller cloud providers to go bankrupt.

“What threatens the economic viability of many cloud services used by customers in Europe are the massive and unjustifiable hikes in prices, the re-bundling of products, altered basis of billing and the imposition of unfair software licensing terms that restrict choice and lock-in customers and partners,” the groups said in a joint statement.

Broadcom said it is creating more choice for customers and partners.

broadcom, cloud, vmware

‘Simplified offering’

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

Last week Broadcom chief executive Hock Tan announced changes to VMware’s licence pricing following complaints by CISPE and others.

The changes included price cuts to VMware’s cloud platform and changes that make it easier for customers to move workloads from their own data centres to cloud providers and from one cloud provider to another.

The European Commission said last week it had sent information requests to Broadcom over the issues.

“The Commission has received information suggesting that Broadcom is changing the conditions of VMware’s software licensing and support,” the Commission said at the time.

EU probe

The probe came after associations of business users in Belgium, France, the Netherlands and Germany, in March took their complaints to EU antitrust chief Margrethe Vestager, EU industry commissioner Thierry Breeton and Commission president Ursula von der Leyen.

The business user groups in a joint letter said Broadcom had made sudden changes in policy and practices that 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.

CISPE separately said Broadcom’s actions amounted to “unilaterally cancelling licence terms for essential virtualisation software” and said smaller cloud providers could go bankrupt as a result.