US company ‘continues to tighten the screws on Europe’s cloud infrastructure sector’ and regulators need to act.
Broadcom is still trying to strongarm VMware customers into accepting huge price increases and onerous licensing terms, says the European Cloud Competition Observatory (ECCO) in its latest report.
If anything, ECCO’s third report, a follow-on from an equally scathing report in May, finds that the situation with VMware has deteriorated during 2025, with the US vendor seemingly still intent on imposing draconian changes that amount, in ECCO’s view, to an abuse of market power.
The organization’s second report appendix noted that members of the Cloud Infrastructure Services Providers in Europe (CISPE), the organization that set up ECCO, had reported price increases of between 800% and 1,500%, with tenfold jumps being common. ECCO’s latest assessment is that the campaign to make providers’ lives more difficult and expensive has continued apace.
The underlying problem: moving to a rival vendor is time-consuming and expensive, effectively giving many cloud service providers nowhere else to go.
“For some workloads, there are no alternatives because they are only certified to run on VMware. Even if it is possible to move workloads, the process can take months or years, during which time partners are forced to pay both Broadcom’s inflated licence fees and their new provider’s licenses,” said ECCO.
Consequently, this move could be “lengthy, expensive and potentially ruinous,” ECCO claimed. “In the current circumstances there is no option but to denote Broadcom’s status as Red – Critical.”
Those migration challenges are on top of the alleged legal intimidation and cease-and-desist letters sent earlier this year to customers with perpetual licenses who had not signed up for subscriptions.
Signaling its determination to challenge Broadcom’s regime, in July ECCO also filed an action with the General Court of the European Union challenging the European Commission (EC) decision that month to approve the VMware acquisition, subject to conditions that made no reference to complaints about its behavior. This is the other side of ECCO and CISPE’s campaign: taking issue with Broadcom and VMware while aiming shots at the EC for not doing enough about the situation.
Microsoft, SAP and Citrix
Many of the complaints were made by CISPE on behalf of its European service provider members. In 2024, CISPE set up ECCO to monitor the behavior of large software vendors in the cloud market, encouraged by concessions it negotiated with Microsoft.
Its first report dealt with Microsoft’s cloud business, and eventually led to changes to the company’s policies on pay-as-you-go pricing, sovereign cloud deployment, and hosting privacy.
On the scorecard, the latest report gives Microsoft’s status as “green,” while noting that the agreement it had reached with the company doesn’t cover issues such as the bundling of AI capabilities or the inconvenient way Entra ID, Azure Active Directory, and Microsoft 365 are still chained together.
However, offsetting this success is the fact that others are now copying Broadcom’s tactics, ECCO said. “One of the more insidious impacts of Broadcom’s bad behaviour is to encourage other vendors to try to impose less favourable licensing terms on their customers and partners.”
Vendors singled out for criticism include SAP and Citrix, with the former now under investigation by the EC for anti-competitive behavior.
ECCO’s report cites a range of complaints against SAP, including one that European customers feel they are under pressure to migrate on premises workloads to the company’s SAP Cloud ERP platform, “without any clear benefits of such a transformation for their organization.”
CISPE’s members were also upset by the full-stack nature of the new platform, which means that customers are only certified to run SAP workloads on large hyperscalers such as Microsoft, AWS, and Google, which it claims excludes independent providers.
Meanwhile, Citrix comes in for criticism for allegedly implementing a Broadcom-like subscription-based licensing, a model that could lead to “significant hikes in cost,” ECCO said.
According to AJ Thompson, chief commercial officer of consultancy Northdoor, the European market needs to wake up to the changes to cloud platforms such as VMware.
“These practices don’t just inflate costs; they risk stifling innovation and compromise Europe’s broader digital sovereignty ambitions,” said Thompson. “Fair, transparent, and flexible software licensing is fundamental to fostering a competitive cloud ecosystem that empowers local providers and protects customers.”
Regulators needed to act soon or risk allowing aggressive licensing to erode competition and customer choice, he said.
Neither Broadcom nor SAP replied to requests for comment by press time, but a Broadcom statement sent to Network World in response to ECCO’s May report stated that the company welcomed “the opportunity to have a constructive dialogue with CISPE on how our products can help their European members be more competitive and innovative.”
