EU Regulators Reportedly Dig Deeper Into Broadcom’s VMware Licensing Changes

Broadcom’s post-acquisition restructuring of VMware is drawing a closer look from European Union regulators, according to a report from Seeking Alpha citing regulatory developments. The scrutiny centers on the licensing overhaul Broadcom introduced after completing its roughly $69 billion purchase of the virtualization software maker, a deal that closed in late 2023 following an extended global antitrust review.

Since taking control, Broadcom has moved away from VMware’s long-standing perpetual license model in favor of subscription-based arrangements, a shift that has frustrated parts of the installed base and prompted complaints from customers and industry groups on both sides of the Atlantic. The company has also bundled VMware products into larger subscription packages, a practice critics say could pressure customers into purchasing software they do not need.

The EU’s deeper examination adds to Broadcom’s regulatory headaches abroad. The company already faces oversight from competition authorities in other jurisdictions over similar concerns, and a group of European cloud infrastructure providers has been among the most vocal critics of the new licensing terms, arguing the changes raise costs and limit choice for smaller hosting firms.

Broadcom has defended its strategy, saying the subscription transition reflects where the market is heading and that it is working to smooth customer migrations. The software business has quickly become a major contributor to the company’s revenue mix, complementing its core semiconductor operations in networking, custom silicon, and wireless components. Broadcom operates in two segments — Semiconductor Solutions and Infrastructure Software — and the VMware integration sits at the heart of the latter.

Shares of Broadcom Inc. traded at $360.83, up 0.39% from the prior close of $359.43, giving the company a market capitalization of approximately $1.99 trillion. The stock’s reaction to the regulatory news was muted, with investors appearing to treat the heightened scrutiny as a continuation of an already lengthy oversight process rather than a new escalation.

Any formal EU action could take months or longer to unfold. European regulators have historically taken a deliberate approach to complaints about software licensing practices, and it remains unclear whether the current review will produce formal charges, a negotiated settlement, or no action at all. In the meantime, Broadcom continues to roll out its unified subscription offerings globally, and enterprise customers are watching for any changes to pricing or packaging that could result from regulatory pressure.

What to watch

• Any formal EU statement of objections or settlement announcement regarding VMware licensing practices
• Broadcom’s next quarterly earnings report, including commentary on Infrastructure Software segment growth and subscription conversion rates
• Potential responses from cloud provider coalitions and enterprise customer groups in Europe
• Developments in other jurisdictions where regulators have examined the VMware acquisition and licensing changes

Source: original release