Cloud Giants Fight to Block $61 Billion Tech Merger

Key points

• CISPE is fighting Broadcom’s acquisition of VMware, citing harm to customers and seeking to annul the European Commission’s decision to approve the merger.
• The acquisition has led to significant price rises, with some customers experiencing increases of 800% to 1500%.
• CISPE is seeking a reduction in prices and a return to pre-acquisition terms for VMware users, with a decision expected within a couple of years.

We have just received word from sources close to the matter that CISPE, the association of Cloud Infrastructure Providers in Europe, is continuing its legal battle against Broadcom’s acquisition of VMware. The acquisition, which was approved by the European Commission earlier this year, has been met with fierce criticism from VMware customers who have seen significant price rises. According to a report by CISPE’s European Cloud Competition Observatory, some customers have experienced price increases of between 800% and 1500%.

CISPE secretary general Francisco Mingorence has spoken out against the European Commission’s decision, stating that it has given Broadcom a blank cheque to raise prices, lock-in, and squeeze customers. This decision, Mingorence claims, was a failure of oversight by the regulator with real-world costs for Europe’s cloud sector and every organization that depends on it. Microsoft, a major player in the cloud industry, may also be affected by this decision, as it competes with VMware in the virtualization market.

CISPE has filed a response in a case it brought before the General Court of the Court of Justice of the European Union, seeking to annul the Commission’s decision. The Commission has filed its defense, and CISPE has responded, claiming that the Commission did not examine the risk of Broadcom using VMware’s dominance to drive price increases and tighten contractual lock-in. CISPE director of communications Ben Maynard has dismissed fears that any action by the Commission could lead to a fine on VMware that would be passed on to its users, increasing prices even further. Azure, Microsoft’s cloud platform, may benefit from a reduction in prices, as it would make Microsoft’s services more competitive.

Maynard stated that the action is against the European Commission’s decision, not against Broadcom or VMware. If the action is successful, VMware users may see a reduction in prices and a return to the terms before the acquisition. Microsoft may also benefit from this decision, as it would allow Azure to compete more effectively with VMware. Broadcom has strongly disagreed with CISPE’s allegations, stating that the European Commission, along with twelve other jurisdictions around the world, approved the acquisition following a thorough merger review process.

The case is expected to be a long and drawn-out affair, but Maynard hopes that it will be solved relatively quickly, with a decision made within a couple of years. As the situation continues to unfold, we will keep a close eye on developments and provide updates as more information becomes available. The outcome of this case will have significant implications for Microsoft, Azure, and the entire cloud industry, and we will be watching closely to see how it affects the market.

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