Cloud businesses and providers have claimed Broadcom’s changes to its cloud licensing practises do not address their concerns about alleged price hikes and unfair licensing terms. 

Last week, Broadcom CEO, Hock Tan, announced changes to its newly acquired cloud computing company VMware’s licensing condition after receiving complaints from EU businesses and a leading trade group. 

The complaints included changes which allowed customers to move their workloads from their own data centres to cloud providers, and significant price cuts to VMware’s cloud platform.

CISPE, a trade body whose members include Amazon and 26 small cloud providers in the EU, said Broadcom’s subscription licence model was not the issue they wanted changed.

“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 customers and partners,” the critics said in a joint statement.

The groups have urged EU regulators to open an investigation into the issue after the EU antitrust watchdog called for rivals and customers to share their views. 

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Broadcom has maintained it was attempting to create more choices for customers and businesses.

“Our simplified offering at a significantly reduced price responds to customer feedback, and is focused on facilitating seamless workload management,” Broadcom said in a statement.

US semiconductor manufacturer Broadcom completed the acquisition of cloud computing company VMware in November 2023.

The closure of the $61bn cash and stock deal came after Broadcom secured approval in China, Australia, Brazil, Canada, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, and the UK.

Established in 1998, California-headquartered VMware agreed to merge with Broadcom in May 2022.

As part of the merger, Broadcom Software Group was renamed and operates as VMware, combining Broadcom’s infrastructure and security software capabilities into an expanded VMware offering.

The US saw a decrease in the value of cloud deals in 2023, following the industry peaking in investment in 2021.

According to GlobalData's deal database, the value of deals in 2023 totalled $19.1bn. This marked a significant decrease from 2021 when deals totalled $54bn.

According to GlobalData forecasts, the total cloud computing market will be worth $1.4trn in 2027, having grown at a compound annual growth rate of 17.1% from $638.6bn in 2022.