CISPE raises red alert over Broadcom’s VMware licensing changes

The European Cloud Competition Observatory (ECCO), a monitoring body established by the association of Cloud Infrastructure Services Providers in Europe (CISPE) as a way to keep cloud licensing practices fair in the region, this week came down hard on Broadcom for its failure to do so.

ECCO, launched last November as part of an anti-competition settlement with Microsoft agreed to in July 2024, was also given a mandate on its formation to monitor other large software firms, including Broadcom/VMware, and issue a report on its findings.

ECCO, which is made up of CISPE members as well as customer organizations Cigref, which represents French CACI40 CIOs and Beltug, which represents Belgian CIOs who act as physical observers, established a Red/Amber/Green (RAG) rating for the issues it looks into.

Green = On-Track: “significant and sufficient progress is being made;” Amber = Off-Track: “there are concerns either that progress has stalled, or that barriers to resolution are proving hard to overcome;” and Red = Critical: “insufficient progress has been made at the time of the report.”

Broadcom: Rating critical

In a report released Tuesday about Broadcom, the company’s status was labeled Red/Critical, with ECCO saying it “supports urgent calls for a formal investigation into Broadcom’s unfair software licensing practices.”

Its authors wrote, “since March 2024, CISPE has campaigned for Broadcom to reconsider its brutal and unacceptable changes to license agreements for the essential VMware virtualization software used by many of its members and cloud customers across Europe.”

They went on to say, “the vast majority of those affected have been forced to accept new terms tying them into exorbitant licence fees for a minimum of  three years because they [simply] could not replace the VMware software needed to service their customers … ECCO supports urgent calls for a formal investigation into Broadcom’s unfair software licensing practices.”

Dario Maisto, senior analyst at Forrester who covers public cloud vendors in EMEA, said Wednesday, “the ECCO report’s feedback on Broadcom leaves little to say, with the vendor showing reportedly little to no interest in collaborating. What is interesting is that the Broadcom issue is bigger than this due to and since the VMware acquisition.”

Since the Broadcom acquisition, he said, “VMware has changed the product bundling, licensing, pricing, and go-to-market strategy for its entire portfolio. This has been a major source of concern for our clients at Forrester for many months now, and Broadcom’s competition posture in Europe only adds to the frustration we see in the market. So, in this case we have concerns coming not only from competitors but also from end-users. This may speed up Broadcom’s course of action at some point.”

A Broadcom representative said “We provide simplified licensing under a model that all leading enterprise software companies offer,” adding, “Our customer retention rate has remained consistent, demonstrating the value we’re delivering.”

Microsoft rating: Amber

ECCO was formed as result of a Memorandum of Understanding (MOU) signed last July between CISPE and Microsoft, and in their report on its progress, they give the firm an Amber rating.

The report stated that “both sides appear committed to finding solutions to open issues. Microsoft has dedicated significant resources, including engineering, development, legal, and senior leadership time to advancing the partnership.”

However, the authors state, “there was not sufficient progress on the hoster product between September 2024 and January 2025. There is a CISPE member concern that too much focus has been applied to the development of Azure Local as the route to delivering MOU requirements. Teams dedicated to the development of that product may not be working in full understanding of the legal requirements of the MOU and thus may not be prioritising the right work.”

According to a release from CISPE, “ECCO rates Microsoft’s progress to date as Amber, indicating that in some areas Microsoft has not yet fully met the expectations of some CISPE members related to the July 2024 agreement. ECCO’s report finds that further progress is needed on business opportunities that Microsoft agreed to collaboratively advance with CISPE as part of its previous agreement with CISPE that led to the Association withdrawing its competition complaint with the European Commission.”

Maisto pointed out, “while progresses have been made with ECCO to resolve CISPE’s competition complaints, there is a lot to do still. It is good that there is at least some level of discussion on competition with Microsoft as far as competition in the European market is concerned, but the pace at which issues are getting solved is probably slower than the rate at which new issues come to life.”

He added, “more stringent digital sovereignty requirements and new AI investments in Europe will force Microsoft to speed up certain collaborations and related activities on its roadmap. As time goes by, digital sovereignty regulations will force hyperscalers to cooperate with local players if they want to offer fully sovereign solutions. But this future is far from becoming reality soon.”