Broadcom backs down on VMware pricing rules as EU begins investigation following complaints

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In response to customer feedback and amidst mounting scrutiny from the industry and now regulators, Broadcom CEO Hock Tan has announced a significant backpedal on the company’s pricing model.

The move comes as the European Union has initiated an investigation into complaints about the company’s pricing practices following its November 2023 acquisition of VMware.

Since then and under its new leadership, VMware’s portfolio has seen significant changes, including the termination of perpetual licenses which left a bitter taste in the mouth of many long-standing customers.

VMware by Broadcom is addressing some controversial changes

In an announcement, Tan highlighted the company’s intention to shift towards simplicity and cost-effectiveness, noting that VMware’s and its customers’ previous pricing structure was complex and costly.

Tan also acknowledged that the company’s move toward a subscription-based model had left perpetual license customers unsupported. However, in an effort to pacify disgruntled users, Broadcom has now confirmed that it will provide “free access to zero-day security patches for supported versions of vSphere,” with more products set to receive a similar treatment in time.

The CEO said that this was to recognize that “fast-moving change[s] may require more time,” indicating that customers had expressed concerns about balancing expenditures between capital and operating spending.

Still, Broadcom remains committed to transitioning VMware to a subscription-based company, claiming that work started in 2018, long after many rivals had already done so.

Besides committing to backing VMware services with “billions of dollars in new investment,” Tan also announced that VMware Cloud Foundation (VCF) would see dramatic price reductions.

A spokesperson for the European Union stated (via Reuters): “The Commission has received information suggesting that Broadcom is changing the conditions of VMware’s software licensing and support.”

Now, according to the report, EU antitrust regulators are enquiring with Broadcom about changes to newly VMware’s licensing conditions.