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European trade group criticises Broadcom cloud licensing adjustments

Written by Wed 24 Apr 2024

Critics of US chipmaker, Broadcom, have said changes to its cloud licensing practices do not address complaints about alleged price increases, unfair software licensing terms, and product bundling.

Trade group Cloud Infrastructure Services Providers in Europe (CISPE) said the changes Broadcom offered last week did not offer solutions to issues they believe may bankrupt smaller cloud providers. 

Members of CISPE include Amazon and 26 small EU cloud providers, including a French association of business users, Cigred, and Austrian cloud service provider, Anexia.

CISPE said the subscription license model has ‘never been the problem’, as CISPE members and their users are already using it.

“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 users and partners,” said CISPE in a group statement.

However, Broadcom said it was creating more choices for users and partners. CISPE said it has welcomed the involvement of the European Commission, who said last week it had sent information requests to Broadcom regarding the issue.

Following complaints from business user associations in Belgium, France, the Netherlands, and Germany, the European Commissioner for Competition, Margrethe Vestager, the European Commissioner for Internal Market, Thierry Breton, and President of the European Commission, Ursula von der Leyen launched an investigation.

Broadcom and VMware Simplified Offering

Last week, President and CEO of Broadcom, Hock Tan, said the company has aimed to facilitate customer digital transformation after the firm acquired VMware last year.

In the statement, Tan said customer feedback prompted a re-evaluation of the VMware Cloud Foundation (VCF) strategy, leading to a simplified go-to-market approach. This includes investment in R&D for VCF, halving its list price, and introducing VMware vSphere Foundation (VVF) for more flexible options.

Broadcom is also restructuring its engagement with cloud service providers, to ensure users can move workloads between data centres and cloud providers. This involves standardising pricing metrics and technology stacks across providers to promote competition and value for customers.

VMware also announced its transition to a subscription model, citing alignment with industry standards and the desire to improve user access to the latest software versions. 

The move is intended to address concerns about upselling practices to help enable innovation and enhance user satisfaction. Perpetual license users will also receive free security patches to maintain their software security.

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Written by Wed 24 Apr 2024

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