CISPE, the association representing Cloud Infrastructure Providers in Europe, is actively challenging the European Commission’s approval of Broadcom’s acquisition of VMware. They assert that the merger has negatively impacted VMware’s customers, leading to increased costs and decreased competition.
The legal action, currently lodged at the General Court of the European Union, follows a 2023 decision by the European Commission to greenlight the acquisition. CISPE’s secretary general, Francisco Mingorence, described the Commission’s approval as a significant oversight that opens the door for Broadcom to raise prices and enforce stricter contractual conditions, thus harming the European cloud sector.
Reports have indicated that affected customers have experienced dramatic price hikes since the merger, with increases ranging from 800% to 1500%. The European Cloud Competition Observatory, part of CISPE, has highlighted these concerning trends in an October report.
In July, CISPE initiated its case, which prompted the European Commission to submit a defense. CISPE’s recent response criticized the Commission for failing to foresee the potential for Broadcom to exploit VMware’s market power. They asserted that the merger should have included safeguards against such practices.
CISPE’s communications director, Ben Maynard, conveyed that a successful outcome of their efforts could lead to reduced prices for VMware users, suggesting that most are already facing elevated costs. While legal proceedings in the General Court are often lengthy, there is hope for a resolution within a couple of years.
Broadcom has strongly countered these allegations, emphasizing that their acquisition received approval not only from the European Commission but also from regulators in twelve other countries, following extensive analysis. They reaffirmed their commitment to uphold the agreements made during the merger review process.
The case highlights the ongoing challenges of regulation and competition in the cloud service marketplace, as numerous stakeholders remain concerned about the implications of such mergers on pricing and service quality.
